Calculate the true Annual Percentage Rate of any loan β including all fees. Compare multiple lenders side by side to find the lowest real cost of borrowing.
APR β Rate
Fees make APR higher
0.5% diff
= $30K on 30yr $300K
Required
Truth in Lending Act
π
General APR Calculator
Any loan type with fees
Loan Details
$
%
Fees
$
$
Mortgage Details
$
$
%
Mortgage Fees & Costs
$
%
$
True Annual Percentage Rate
6.56%
Nominal Rate: 6.00% Β· APR is 0.56% higher due to fees
$1,110
Monthly Payment
$133,225
Total Payments
$33,225
Total Interest
$2,500
Total Fees
π Nominal Rate vs Real APR
Nominal Rate
6.00%
True APR (with fees)
6.56%
APY (compounded)
6.74%
π° Fee Impact on APR
Fee TypeAmountAPR Impact
π¦ Lender Comparison
Scenario
Rate
Fees
Monthly
True APR
π Payment Breakdown: Principal vs Interest vs Fees
APR vs Interest Rate: Why It Matters
The interest rate tells you the cost of borrowing the principal. The APR (Annual Percentage Rate) tells you the true all-in cost once mandatory fees are included. Our APR calculator exposes the real cost of any loan offer and lets you compare lenders on equal footing. Always use APR β not the nominal rate β when comparing loan offers. For full loan analysis, also use our loan calculator, mortgage calculator, and refinance calculator.
π How APR is Calculated
APR β (Total Interest + Fees) / Principal / Term Γ 100
More precisely, APR is the interest rate that makes the present value of all future loan payments equal to the net loan amount (after fees):
Loan β Fees = Ξ£ [Payment / (1 + APR/n)^t]
This is solved numerically (Newton-Raphson). Our calculator does this automatically.
βοΈ APR vs APY vs Interest Rate
Interest Rate: Cost of borrowing principal only. No fees.
APR: Interest rate + mandatory fees, annualized. Use this to compare loan offers.
APY: Accounts for compounding within the year. APY > APR when compounding more than annually.
Always review the Loan Estimate for excluded costs β APR alone doesn't tell the whole story.
Frequently Asked Questions
APR is higher because it includes the interest rate plus any mandatory fees (origination fees, discount points, broker charges) spread over the loan term. If a loan has no fees, APR equals the interest rate. The more fees a loan has, the bigger the gap between the nominal rate and APR. This is exactly why APR is more useful for comparing loans β it captures the full cost of borrowing, not just the headline rate.
The lowest APR is the best deal if you keep the loan for its full term. But if you plan to refinance, sell, or pay off early, a loan with a lower nominal rate but higher fees may cost less overall β because APR amortizes fees over the full term. Always compare total cost for the period you actually plan to hold the loan, not just the APR. Use our refinance calculator to model early payoff scenarios.
APR (Annual Percentage Rate) is used for loans and represents the annualized interest cost including fees. APY (Annual Percentage Yield) accounts for compounding within the year and is typically used for savings accounts. APY is always higher than APR when interest compounds more than once a year. Formula: APY = (1 + APR/n)^n β 1, where n is the compounding periods per year. At 6% APR compounded monthly, APY = 6.168%.
Discount points are prepaid interest β paying 1 point upfront (1% of the loan) typically lowers your nominal rate by 0.125β0.25%. Points are included in APR calculations, so they raise the APR relative to a no-points loan at the same nominal rate. Whether points are worth it depends on your break-even: divide the point cost by monthly savings to find how many months to recover the upfront cost. If you'll keep the loan beyond that, points save money.
Variable APR loans carry interest rate risk β if rates rise, your cost increases. However, variable APR loans often start lower and may save money if rates remain stable or fall, or if you hold the loan for a short period. Fixed APR loans cost more upfront but provide certainty. Variable loans make sense for short hold periods or when you expect rates to drop. Always stress-test a worst-case rate increase (+2β3%) to see if payments remain manageable before choosing a variable rate.
