APR Calculator

The interest rate prices the borrowing. The APR prices the borrowing plus every required fee — origination charges, discount points, and other mandatory costs — expressed as a single annual percentage. That is what makes APR the only sound basis for comparing two loan offers, and why lenders in many jurisdictions are required to disclose it.

The comparison it enables is genuinely non-obvious. A loan with a lower headline rate and substantial origination fees frequently costs more than one with a higher rate and none. Comparing on the rate alone gets that backwards, and the gap is largest on smaller loans, where a fixed fee is spread across less principal.

APR has a blind spot: it assumes you hold the loan for its full term. Discount points are prepaid interest that buys a lower rate, so they only pay off if you keep the loan long enough to recover the upfront cost. Sell or refinance before that break-even and paying points loses money, even though the APR looked better. If there is any real chance of an early exit, compare total cost over your expected holding period rather than over the full term.

Two other cautions. On variable-rate products the APR is calculated from current index levels and will change — it is a snapshot, not a commitment. And credit cards work differently again: card APR usually excludes annual fees, and the rate is applied to whatever balance carries past the grace period, so the effective cost depends heavily on whether you pay in full each month. Everything runs in your browser — no login, no upload, and no figure you enter leaves the page.