APR Calculator
The annual percentage rate of a loan once its prepaid finance charges, such as points and lender fees, are counted.
Result
APR: 6.7052%
Arithmetic on the charges you classify. It is not a Truth in Lending disclosure.
- Interest rate
- 6.5%
- APR above the interest rate
- 0.2052%
- Monthly payment
- $1,264.14
- Amount financed
- $195,800.00
- Total finance charge
- $259,285.82
- Everything paid beyond the loan
- $259,285.82
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Results are arithmetic estimates based on the values you enter. Rates, fees and terms are set by your lender or provider, and your actual agreement controls what you pay or receive. Confirm important figures with them or with a qualified adviser. Read the full disclaimer
How to use the APR Calculator
- Enter the loan amount, the interest rate and the term in months.
- Enter the prepaid finance charges, such as points and lender fees paid at closing, and optionally any other closing costs.
- Read the APR and how far it sits above the interest rate.
How the APR is found
amount financed = loan − prepaid finance chargesAPR = 12 × r, where the payments discounted at r each month add up to the amount financedYou borrow the full loan and repay it with interest, but the charges paid at closing mean you actually received less. The APR is the rate that makes your payments exactly repay what you received. It is solved by a search that narrows in from both sides until it converges, the method Regulation Z’s appendix J describes. It is not estimated by adding the fees to the rate.
Points
A discount point is 1% of the loan, paid at closing to lower the interest rate. Points are finance charges, so they raise the APR. Comparing APRs is how to tell whether paying points is worth it: a lower rate with points can have a higher APR than a higher rate without them, particularly if you expect to sell or refinance within a few years.
What this is not
This is arithmetic on the charges as you classify them, not a Truth in Lending disclosure. The other closing costs you enter are added to the cash cost shown, but they are not part of the APR.
With your numbers
- Amount financed = $200,000.00 − $4,200.00 = $195,800.00
- Monthly payment on the full loan = $1,264.14
- APR = 12 × the monthly rate at which those payments are worth $195,800.00 = 6.7052%
Quick reference
Arithmetic on the charges you classify. It is not a Truth in Lending disclosure.
| Example | APR |
|---|---|
| USD 200,000 at 6.5%, 30 years, no charges | 6.5% |
| Same with USD 4,200 of charges | 6.7052% |
| Same with USD 10,000 of charges | 7.0005% |
| USD 10,000 at 11.99%, 36 months, USD 500 | 15.595% |
| USD 300,000 at 6%, 15 years, 1 point | 6.1573% |
| USD 30,000 car loan at 7%, 60 months, USD 400 | 7.5649% |
Common questions about the APR Calculator
- What is the difference between the interest rate and the APR?
- The interest rate sets your payment. The APR also counts the finance charges you pay up front, expressed as a yearly rate over the life of the loan. On 200,000 at 6.5% over 30 years, 4,200 of points and fees raise the APR to 6.71%. With no charges the two are the same, and that is how this page checks itself.
- Which fees count towards the APR?
- Under Regulation Z, finance charges are costs of credit imposed by the lender or as a condition of the loan: discount points, origination and underwriting fees, and mortgage broker fees usually count. Many third-party charges, such as appraisal, title and recording fees on a mortgage, usually do not. The page lets you put each charge on the side you believe it belongs. Your lender’s Loan Estimate shows how they classified it.
- Why does the APR matter more on a short loan?
- Because the same fee is spread over fewer payments. 500 of fees on a three-year 10,000 loan at 11.99% takes the APR to 15.60%, more than three and a half points higher. The same fee on a 30-year mortgage would barely move it.
- How accurate is this APR?
- It is solved exactly from the loan’s payment schedule, to the cent, and shown to four decimal places. Regulation Z allows a disclosed APR to be off by up to an eighth of a percentage point on a regular loan. A lender’s figure can differ from this one within that tolerance, or because the lender counted different charges or used an irregular first period.