APR Calculator
A low rate with high fees can cost more than a higher rate with none. This computes the real annual rate after fees.
Find the true APR
Rate vs. APR — the difference is the fees
The interest rate prices the borrowed money. The APR prices the whole deal: it spreads origination fees, points, and other mandatory charges across the loan term and expresses everything as one annual rate. US lenders are required by the Truth in Lending Act to disclose it, because a "6.25%" loan with $6,000 in fees is not actually a 6.25% loan.
How the calculator finds it
You effectively receive the loan amount minus the fees, but repay payments based on the full amount. The APR is the rate that makes those payments worth exactly what you received — found by iteration, the same way lenders compute it. On $300,000 at 6.25% for 30 years with $6,000 in fees: payment about $1,847, true APR about 6.43%. The fees quietly added roughly 0.18 points to your real rate.
Using APR to shop — and its one blind spot
Comparing identical loan types and terms, lower APR wins — it's the honest apples-to-apples number. The blind spot: APR assumes you keep the loan to full term. If you'll sell or refinance in 5 years, upfront fees hurt much more than the APR suggests, because they're amortized over years you won't use. Short expected horizon → favor low fees over low rate; long horizon → paying points for a lower rate can genuinely pay off.
Frequently asked questions
What fees are included in APR?
Generally lender-imposed costs: origination fees, discount points, underwriting and processing fees, and certain closing costs. Third-party costs like appraisal, title insurance, and prepaid taxes are typically excluded — which is why two lenders' APRs can still hide differences.
Should I pay points for a lower rate?
Find your break-even: points cost ÷ monthly savings = months to recoup. Keep the loan well past break-even and points pay; sell or refinance before it and they don't.
Why is APR on my credit card the same as the rate?
Cards typically have no upfront financed fees, so rate and APR coincide. Card APR compounds on your daily balance — a different (and crueler) animal than installment APR.
Is a no-closing-cost loan really free?
No — the costs are recovered through a higher rate. Compare the no-cost APR against the with-cost APR over your realistic time horizon; for short stays, no-cost often genuinely wins.