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Results
Annual Percentage Rate (APR)
Monthly Payment
Total Interest Paid
Total Amount Paid
Usage Instructions
- Enter your total loan amount.
- Enter the loan term in months and the nominal interest rate (%).
- Enter any upfront additional fees required to obtain the loan, then click calculate to see the APR and payment details.
Tips
- APR reflects the true cost of borrowing better than the nominal interest rate because it includes additional fees.
- When comparing different loan products, comparing their APRs is usually more accurate than comparing only their nominal rates.
Calculation Method
What is APR?
The Annual Percentage Rate (APR) is the annual cost of a loan to a borrower — including fees. Like an interest rate, the APR is expressed as a percentage. Unlike an interest rate, however, it includes other charges or fees (such as mortgage insurance, closing costs, discount points, and loan origination fees) to reflect the total cost of the loan.
Mathematical Formula
Calculating the APR usually requires solving for the internal rate of return (IRR). The goal is to find the periodic rate 'r' such that the sum of the present values of all future payments equals the net loan amount received (Loan Amount - Fees).
P - F = Σ [ A / (1 + r)^t ]
- P = Loan Amount
- F = Upfront Fees
- A = Monthly Payment
- r = Periodic Rate (APR / 12)
- t = Period Number (1 to n)
