APR Calculator (with Fees)
Convert a loan's note rate plus upfront fees into its true annual percentage rate (APR) — the real cost lenders must disclose.
How it works
Payment set by the note rate. APR = the annual rate i where (loan − fees) = payment × (1 − (1 + i/12)^−n) ÷ (i/12), solved numerically, then ×12.
The note rate sets your monthly payment, but it ignores the fees you pay upfront. APR folds those fees back in by asking: what single rate, applied to the money you actually received (loan minus fees), reproduces the same stream of payments? Because you got less cash but still repay the full schedule, that rate is always at or above the note rate. APR is the legally disclosed, apples-to-apples number for comparing loans with different fee structures.
Worked example
On a $200,000 loan at a 6.5% note rate over 30 years, the payment is about $1,264. With $4,000 of fees you effectively received $196,000, yet still repay $1,264 a month for 360 months. The rate that makes $196,000 grow into that payment stream is about 6.68% — the true APR.
Frequently asked questions
Why is APR higher than the interest rate?
Because APR spreads your upfront fees and points across the loan as if they were extra interest. You borrow the full amount but net less cash after fees, so the effective rate on the money you actually keep is higher than the quoted note rate.
When are APR and the note rate the same?
When there are no fees. Set upfront fees and points to zero and the APR equals the note rate, because you received exactly the loan amount you repay against.
Does APR account for paying the loan off early?
No. APR assumes you keep the loan for its full term. If you pay off or refinance early, the fixed upfront fees are spread over fewer years, so your real effective rate is higher than the disclosed APR.
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Educational estimate, not financial advice. Actual loan terms, fees and interest depend on your lender and credit profile.