APR Calculator: True Loan Cost & Amortization
Calculate the Annual Percentage Rate (APR) for mortgages and loans, accounting for fees and closing costs. Generate compliance-ready amortization schedules.
About
Borrowers often confuse the interest rate with the Annual Percentage Rate or APR. The interest rate determines the monthly payment amount but the APR reflects the total cost of borrowing by including lender fees, prepaid interest, and closing costs. Federal regulations require lenders to disclose the APR to prevent deceptive marketing practices where a low rate masks high upfront fees. This tool reverses the calculation to find the true yield the lender is earning on your money.
Use this calculator to compare loan offers with different fee structures. A loan with a lower interest rate but higher closing costs might actually have a higher APR than a standard loan. Understanding this metric protects you from overpaying for points or administrative fees that do not provide a mathematical benefit.
Formulas
The APR is found by solving for the rate r in the annuity formula where the Present Value equals the Loan Amount minus Fees.
Where PMT is the monthly payment calculated on the full loan amount and PVnet is the loan proceeds received.
Reference Data
| Loan Amount | Interest Rate | Term | Upfront Fees | Calculated APR | Monthly Payment |
|---|---|---|---|---|---|
| $200,000 | 6.5% | 30 yr | $0 | 6.500% | $1,264 |
| $200,000 | 6.0% | 30 yr | $4,000 | 6.185% | $1,199 |
| $200,000 | 5.5% | 30 yr | $8,000 | 5.892% | $1,135 |
| $50,000 | 8.0% | 5 yr | $0 | 8.000% | $1,013 |
| $50,000 | 8.0% | 5 yr | $1,500 | 9.340% | $1,013 |