Calculate annual percentage rate from loan terms, fees, and points to compare true borrowing costs across different loan offers.
A loan's advertised interest rate ignores origination fees, discount points, and closing costs charged to get that rate, so two offers with identical rates can cost differently. This calculator takes the loan amount, note rate, term, and total fees, computes the scheduled payment from the note rate, then solves for the discount rate that equates the present value of those payments to the amount actually disbursed after fees. That solved rate is the APR. The common surprise: on short-term loans a small fee inflates APR far more than the same fee does on a 30-year mortgage, because there are fewer payments to spread it across.
A concrete input and expected output from the current implementation.
Input
Loan amount $10,000, note rate 6%, term 12 months, fee $100 deducted from proceeds
Expected output
Monthly payment: $860.66. APR: approximately 7.88%
The $860.66 payment is set by the $10,000 face amount at 6% over 12 months; solving for the rate that discounts those same 12 payments down to the $9,900 the borrower actually receives (after the $100 fee) yields about 7.88%, well above the 6% note rate because only 12 payments absorb the fee.
The monthly payment is calculated from the loan amount, note rate, and term using a standard amortization formula, exactly as the lender would compute it. This payment stays fixed for the rest of the calculation - only the discount rate applied to it changes when solving for APR.
Fees and points are subtracted from the loan amount to get the amount actually financed. The calculator then searches for the interest rate that makes the present value of the fixed payment stream equal that reduced amount, iterating until the two match within a fraction of a cent. That rate, annualized, is the APR.
Because APR folds in the lender fees and points paid to get that rate, spread as if they were interest across the loan term. Any nonzero fee raises APR above the note rate; the gap is bigger on shorter loans and smaller on longer ones since fees have fewer payments to average over.
Not reliably. Federal Reg Z rules govern precisely which fees are finance charges and include specific rounding and tolerance rules; this tool applies the same amortization math but the exact figure a lender discloses depends on how they classify each fee, which this calculator does not do for you.
The example and behavioral notes were checked against the browser implementation. Standards and primary references below define the relevant format, formula, or platform behavior.
Calculate gross, operating, and net profit margins from cost and revenue with breakeven analysis.
Convert between annual salary and hourly rate with adjustments for work hours, overtime, and benefits.
Calculate sales tax amounts, tax-inclusive and tax-exclusive prices for any tax rate or jurisdiction.
Calculate return on investment from initial cost and final value with annualized ROI and comparison tables.
Convert between markup and margin percentages, calculate selling price, and compare pricing strategies.
Convert numeric amounts to written words for invoices, checks, and legal documents in multiple currencies.