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APR Calculator

Calculate Annual Percentage Rate for loans and mortgages

General APR Calculator

Calculate APR for personal loans, auto loans, and other financing options

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Loan Summary

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Cost Breakdown

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Amortization Schedule

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Mortgage APR Calculator

Calculate APR for mortgage loans in the United States

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Mortgage Summary

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APR Calculator

The Annual Percentage Rate (APR) is one of the most critical figures you need to know when considering any loan, from personal loans and auto loans to mortgages and credit cards. Use our comprehensive APR Calculator to determine the real, all-inclusive cost of your loan, allowing you to make smarter financial decisions and compare offers with confidence.

What is APR (Annual Percentage Rate)?

The Annual Percentage Rate (APR) is an all-inclusive, annualized cost indicator of a loan. It’s more than just the interest you pay; the APR factors in the interest rate as well as fees and other charges a borrower must pay over the life of the loan. This comprehensive calculation provides a standardized, apples-to-apples metric for comparing loan products offered by different lenders.

APR vs. Interest Rate: Know the Difference

Borrowers often confuse the APR with the interest rate. While related, they are distinct:

FeatureInterest RateAnnual Percentage Rate (APR)
DefinitionThe compensation, paid periodically, solely for borrowing the principal amount.The total annualized cost of the loan, including interest and most fees.
InclusionsOnly the cost of the principal.Interest plus most loan fees (e.g., origination, processing, points).
Best ForCalculating the periodic interest payment on the principal.Determining the total cost of the loan and comparing loan offers.

The simple interest rate alone does not offer the accuracy needed to determine the best loan deal. Since the APR includes both interest and qualifying fees, it ensures you see the full financial picture upfront.

In the U.S., the Truth in Lending Act (TILA) legally mandates lenders to clearly display the APR so consumers can easily compare lending costs across competitors.

Mortgage APR: Specific Fees and Exclusions

For major purchases like a home, the Mortgage APR is especially important. While fees vary by lender, prospective borrowers should always request a detailed list of all costs factored into the quoted APR.

Fees Typically Included in a Mortgage APR (U.S.)

  • Administration fees
  • Application fees
  • Mortgage insurance (like Private Mortgage Insurance, or PMI)
  • Mortgage broker fees
  • Audit fees
  • Certain closing fees
  • Escrow fees
  • Origination points
  • Discount points
  • Processing fees
  • Refinance fees
  • Underwriting fees

Fees Usually Exempt from a Mortgage APR

  • Appraisal fees
  • Survey fees
  • Title insurance and fees
  • Builder warranties
  • Pre-paid items (e.g., property taxes or insurance placed in escrow)
  • Intangible taxes

Limitations of the APR for Early Repayment:

While the APR is an excellent tool for loan comparison, it operates on the presumption that the loan will run its full term. This can present a limitation, especially for mortgages:

  • Upfront Costs Impact: For borrowers planning to pay off a loan quickly (e.g., refinancing a 30-year mortgage after 5-10 years), the APR may underestimate the impact of upfront costs. Upfront fees appear significantly cheaper when mathematically spread over 30 years versus a more accelerated 10-year repayment.
  • Early Payoff Advantage: When comparing two loans with the same APR, the loan with lower upfront fees is often more favorable if you intend to pay off the mortgage early.

Types of APRs: Fixed vs. Variable

Lenders offer two primary types of APR structures, each with its own risk profile:

Fixed APRs

  • Stability: Offers a steady interest rate and fixed APR for the entire duration of the loan.
  • Pro: Provides predictable payments and protection if market interest rates rise.
  • Con: Fixed rates are generally higher than variable rates at the time of origination.

 Variable APRs

  • Fluctuation: Rates may change over time, typically rising and falling in tandem with a specific market index (like the Federal Funds Rate or SOFR).
  • Credit-Based Margin: Variable APRs often include a credit-based margin, where a portion of the rate is determined by the borrower’s creditworthiness. Poor credit scores can lead to a higher overall variable rate.
  • Strategy: Variable rates can be advantageous if you take out a loan during a time of relatively high market rates and analysts forecast a rate decline. Historically, borrowers have sometimes paid less interest with a variable rate over the life of the loan, especially for shorter terms.

APR vs. APY: Deposits vs. Debt

When reviewing deposit accounts (like savings accounts or CDs) versus debt, you’ll encounter two different annual rates: APR and APY.

FeatureAPR (Annual Percentage Rate)APY (Annual Percentage Yield)
Applicable ToLoans and credit products (Debt).Deposit and savings accounts (Yield/Earnings).
CompoundingTypically calculated based on simple interest for TILA purposes, assuming monthly compounding for loan payments.Reflects the total interest paid over a year based on the interest rate and compounding frequency (e.g., daily, monthly).
Alternative NamesNone commonly used.Also known as EAPR (Effective Annual Percentage Rate) or EAR (Effective Annual Rate).

The Key Difference: APY considers the effect of yearly compounded interest on your effective rate, while the APR is a straight-line annual rate that does not account for compounding in its stated value.

For positive interest rates, the APY will always appear higher than the APR. This is why financial institutions advertise:

  • APR for loans (to make the cost look smaller).
  • APY for savings accounts (to make the return look higher).

The Math Behind APY and APR

The relationship between the stated APR (annual rate r) and the APY (or EAR) depends on the compounding frequency (n).

For a given nominal annual interest rate (r), compounded n times per year, the Effective Annual Rate (EAPR or APY) is calculated as:

EAPR (or APY) = (1 + r / n)n − 1

For example, a loan of $100 with a stated APR of 10% compounded monthly (n=12) has an equivalent APY of:

APY = (1 + 0.10/12)12 − 1 ≈ 0.1047 or 10.47%

The APY of 10.47% is the true return or cost after accounting for compounding.

Related Calculators:

Compound Interest Calculator, Mortgage Calculator, Loan Calculator

The Interest Rate is just the basic cost of borrowing the money. The APR (Annual Percentage Rate) is the total annual cost—it includes the Interest Rate PLUS all the mandatory fees (like origination or application fees). Always compare APRs, not just interest rates, to see the true cost.

Because the APR adds the cost of all those required loan fees (e.g., admin, underwriting, points) onto the base interest rate. Lenders must show the APR so you see the complete, all-in cost, which is why it’s usually higher.

Not entirely. The APR assumes you keep the loan for the full term (e.g., 30 years). If you plan to pay it off sooner, the APR might make the upfront fees look less impactful than they really are. If you pay early, choose the loan with the lowest upfront fees, even if the APRs are identical.

  • Fixed APR stays the same forever. Your payment is totally predictable.

  • Variable APR can change over the loan’s life, moving up or down based on market rates. It starts riskier but can sometimes save you money if rates fall.

Think of them this way:

  • APR is for Debt (Loans). It makes the cost look lower.

  • APY (Annual Percentage Yield) is for Savings (Deposits). It shows the compounded earnings to make your return look higher.