Stated Rate
6.50%
APR Calculator
Convert a loan's stated rate plus fees into an effective Annual Percentage Rate.
Effective APR
6.70%
Monthly Payment
$1,896.20
Fees Financed Effect
$6,000.00
What is the APR Calculator?
APR (Annual Percentage Rate) expresses the true yearly cost of a loan by folding upfront fees into the rate. Two loans can share the same headline interest rate yet cost very different amounts once origination fees and points are counted — APR is the number that makes them comparable, which is why U.S. lenders are legally required to disclose it.
The formula
APR is the rate that makes the present value of the actual payments equal the cash you actually receive (loan minus fees). There is no closed form — it's solved numerically:
Net proceeds = Σ Payment ÷ (1 + APR/12)ᵏ for k = 1…n- Payment
- the monthly payment implied by the stated rate
- Net proceeds
- loan amount − fees (what actually reaches you)
- n
- number of monthly payments
- APR
- the rate that balances the equation
Because you receive less than the face amount but repay on the full amount, the APR always lands above the stated rate whenever fees exist.
Worked example
A $300,000 mortgage at a 6.5% stated rate over 30 years, with $6,000 in fees.
The monthly payment (set by the stated rate) is $1,896.20, but because you only net $294,000 after fees, the effective APR is 6.70% — meaningfully above the 6.5% sticker.
Prefer your own numbers? Enter them in the calculator above — it recomputes instantly.
Key terms
- APR
- The yearly cost of a loan including fees, expressed as a percentage.
- Stated (nominal) rate
- The headline interest rate before any fees are considered.
- Points
- Optional upfront fees paid to lower the interest rate; 1 point = 1% of the loan.
- Origination fee
- A charge the lender adds for processing the loan.
- Present value
- What a future stream of payments is worth today at a given discount rate.
Frequently asked questions
Why is APR higher than the interest rate?
Because it counts fees. A loan with no fees has an APR equal to its interest rate; every fee pushes the APR above it.
Is the lowest APR always the best deal?
Usually — but APR assumes you keep the loan for its full term. If you'll refinance or move soon, a lower-fee loan with a slightly higher rate can cost less in practice.
Does APR include everything?
It includes finance charges like points and origination fees, but not always every third-party cost (appraisal, title). Always read the official loan estimate.