How to use this calculator
- Loan amount. The amount you borrow and must repay.
- Interest rate. The yearly rate quoted by the lender. This is sometimes called the nominal or note rate.
- Term. The length of the loan in years.
- Upfront fees. Charges you pay to get the loan, such as origination or processing fees. Enter the total in dollars.
The calculator shows four results:
- APR. The yearly cost of the loan with fees included, as a percentage.
- Monthly payment. Based on the full loan amount and the quoted interest rate.
- Total interest. All interest paid over the term.
- Total finance cost. Total interest plus the upfront fees.
Worked example
These are the starting values in the calculator above and the results they give. Change any input to see your own numbers.
- Loan amount
- $20,000
- Interest rate
- 7%
- Loan term
- 5 years
- Upfront fees
- $600
- APR
- 8.286%
- Monthly payment
- $396.02
- Upfront fees
- $600
- Total interest
- $3,761
- Total finance cost
- $4,361
How APR is calculated
APR stands for annual percentage rate. It expresses interest and fees together as one yearly rate.
The idea is simple. Fees reduce the money you actually receive, but your payments are still based on the full loan amount. If you borrow $10,000 and pay $300 in fees, you receive $9,700 but repay a $10,000 loan.
The calculation has three steps:
- Find the monthly payment from the loan amount, the quoted rate and the term.
- Subtract the fees from the loan amount to get the amount received.
- Find the rate that makes those same monthly payments exactly repay the amount received. That rate, stated per year, is the APR.
There is no direct formula for the last step. The calculator tests rates until it finds the one that fits. When fees are zero, the APR equals the interest rate.
Solve for a in: P − F = M × (1 − (1 + a)^(−n)) ÷ a, then APR = a × 12 × 100- P
- loan amount
- F
- upfront fees
- M
- monthly payment, from the loan amount and quoted interest rate
- n
- number of monthly payments (years × 12)
- a
- monthly rate that makes the payments equal the amount received
How to read the results
The gap between the interest rate and the APR shows how much the fees add to the cost of borrowing.
- Higher fees push the APR further above the interest rate.
- Shorter terms make the same fee count for more, because it is spread over fewer years.
- Comparing offers. A loan with a low rate and high fees can cost more than a loan with a higher rate and no fees. Comparing APRs for the same loan amount and term accounts for both.
APR assumes you keep the loan for the full term. If you repay early, the upfront fees are spread over less time and the effective cost is higher than the APR suggests.
Lenders may include or leave out different fees when they quote an APR, so ask what is counted. APR is also different from APY, which measures what savings earn with compounding. Our guide on APR vs APY explains the difference, and the glossary defines other loan terms. For the payment schedule itself, use the loan calculator.
Frequently asked questions
What is the difference between APR and interest rate?
The interest rate is the yearly charge on the money you borrow and is used to work out your payment. APR includes that interest plus the upfront fees, expressed as a single yearly rate. When a loan has fees, the APR is higher than the interest rate. When there are no fees, the two are the same.
How is APR calculated on a loan?
First the monthly payment is worked out from the loan amount, interest rate and term. Then the upfront fees are subtracted from the loan amount to find what you actually receive. The APR is the yearly rate at which those same monthly payments would exactly repay the amount received. It is found by testing rates until one fits.
Why is my APR higher than my interest rate?
Fees are the reason. You pay them to get the loan, so you receive less than the amount you owe, yet your payments are based on the full amount. That makes the true cost of each dollar received higher than the quoted rate. The larger the fees or the shorter the term, the wider the gap.
Is a lower APR always the better loan?
For two loans of the same amount and term that you keep to the end, the lower APR generally costs less. It is less reliable when the terms differ or when you expect to repay early, because upfront fees weigh more heavily over a short time. Check the monthly payment and total finance cost alongside the APR.
Which fees are included in APR?
APR is meant to include the charges you must pay to get the loan, such as origination, processing or underwriting fees. Optional charges and costs that depend on your behavior, such as late fees, are generally left out. Practice varies between lenders and loan types, so ask which fees are counted in any APR you are quoted.
This calculator gives estimates for education only. It does not know your full situation and is not financial advice. Reviewed and updated November 15, 2026.