APR Calculator (True Cost of a Loan)
The rate is not the cost: fees, insurance and tax decide which loan is cheapest.
Side by side
Where the money goes
How this was calculated
Results are estimates for general information and planning, not financial advice. Banks and institutions may calculate differently (rounding, fees, rate changes). Confirm figures with your lender or a qualified adviser before deciding.
About the APR Calculator (True Cost of a Loan)
The interest rate is what the lender charges on the balance; the APR is what the loan really costs once every fee is counted. A loan at 11% with a 1% processing fee and tax on it has an APR of 11.52%, because only part of the money reaches you while the payments stay the same.
Enter the loan, the rate, the term and each fee — the processing fee, documentation or legal charges, insurance — and whether it is deducted from the loan, paid in cash or added to it. The calculator shows the payment, the money you receive, the finance charge (interest plus fees), the total you repay and the APR, both as the nominal rate used in the United States and as the effective annual rate used in the UK and the EU. Add a second and third offer to see which is really cheapest, including the case where the lowest APR is not the least money repaid.
How to use it
- Enter the loan amount, and the tax on fees if your country charges one (18% for GST on loan fees in India; 0 elsewhere).
- For each offer, enter the lender’s name, the interest rate and the term in monthly payments.
- Add each fee: as a percentage of the loan or an amount, and whether it is deducted from the loan, paid in cash or added to the loan.
- Untick counts in the APR for a charge that is genuinely optional (optional credit insurance you chose in writing); it is still counted in what you pay.
- Use Add an offer to compare up to three, and read the table: payment, fees, what you receive, finance charge, total and APR.
- Copy the summary or download the comparison as a CSV file.
Examples
Payment 10,871.21 · you receive 494,100 · finance charge 158,172.69 · APR 11.52% (12.15% effective)
Paid in cash: payment 500.95, APR 8.18%. Added to the loan: payment 508.96, APR 8.17%
A fee added to the loan is repaid with interest, so it costs more in money but slightly less in APR than the same fee deducted at the start.
APR 12% exactly — with no fees the APR is the interest rate
Payment 5,000 · APR 3.11%
A “0%” loan with a fee is not free: the fee alone sets the APR.
APR 11.52%, 11.54% and 12% — the first has the lowest APR, but the 36-month loan repays 54,415 less in total
Common uses
- Compare loan offers whose rates and fees pull in different directions.
- Check the APR on a key fact statement, a Loan Estimate or a Truth in Lending disclosure.
- See what a “zero interest” or “low rate” offer with a fee really costs.
- Decide whether to pay a fee in cash or add it to the loan.
How the APR is worked out
The APR is the rate at which the money you receive equals the present value of what you repay. The calculator builds the cash flows — what reaches you at the start, then each monthly payment — and searches for the monthly rate r that balances them (by bisection, so it always converges).
It then states that rate two ways:
- Nominal APR = r × 12. This is the US method: the APR is “the nominal annual percentage rate determined by multiplying the unit-period rate by the number of unit-periods in a year”, and with monthly payments “there are 12 unit-periods per year” (Regulation Z, appendix J).
- Effective annual rate = (1 + r)^12 − 1. This is the form behind the UK and EU APR, which equates the present values of drawdowns and repayments “on an annual basis”, with a year of 12 equal months (FCA CONC App 1.2.6R). It is always the higher of the two.
Finance charge, amount financed and fees
Regulation Z calls the total cost of credit the finance charge — “the cost of consumer credit as a dollar amount” (12 CFR 1026.4(a)) — and the money that reaches you the amount financed, which is the loan plus anything else financed, less any prepaid finance charge (1026.18(b)). In the disclosures a lender must describe the APR as “the cost of your credit as a yearly rate” and the total of payments as “the amount you will have paid when you have made all scheduled payments”.
How a fee is paid changes the result:
- Deducted from the loan: the payment is unchanged and you receive less, so the APR rises most.
- Paid in cash at closing: the same effect on the APR, and it is money out of your pocket on top of the payments.
- Added to the loan: you receive the full amount, the payment is higher, and you pay interest on the fee for the whole term.
Optional credit insurance may be left out of the finance charge when it is not required, its premium is disclosed, and you asked for it in writing (1026.4(d)(1)); untick counts in the APR for such a premium. The calculator still adds it to what you pay.
The APR in your loan papers
In India, lenders must give a key fact statement for retail and MSME term loans, with a computation sheet for the APR — the “annual cost of credit to the borrower which includes interest rate and all other charges associated with the credit facility”. Charges a lender collects for third parties, such as insurance and legal fees, “shall also form part of the APR”, and a fee that is not in the statement cannot be charged later without your agreement (RBI circular on the Key Facts Statement). Credit-card receivables are outside that circular.
In the United States the APR and the finance charge are on the Loan Estimate and Closing Disclosure for a mortgage, and in the Truth in Lending disclosure for other credit. Compare the APR here with the one you are given: a difference usually means a fee you have not entered, or one the lender has left out.
Limitations
- Payments are monthly and equal, and interest is charged monthly (rate ÷ 12). Weekly or fortnightly schedules, irregular payments and daily-interest methods are not covered.
- US mortgage APRs follow detailed rules about which closing costs count; this calculator counts exactly the fees you mark as counting, so it may differ from a lender’s figure.
- Prepayment, late fees, variable rates and insurance refunds are not modelled. For a rate change or a planned prepayment use the loan comparison calculator.
- Taxes you may be able to reclaim (input tax credit on GST, for a business) are counted as a cost here.
Privacy
Everything is calculated in your browser. The amounts, rates and fees you enter are never uploaded or stored.
Frequently asked questions
What is the difference between APR and interest rate?
The interest rate applies to the balance; the APR also counts the fees, by asking which yearly rate turns the money you really receive into the payments you make. A 1% fee on a five-year loan at 11% lifts the APR to 11.52%.
How do I calculate APR by hand?
You cannot solve it directly — it is the internal rate of return of the loan. In a spreadsheet, =RATE(n, −payment, amount_received) × 12 gives the nominal APR, and (1 + RATE(…))^12 − 1 the effective annual rate. This page does the same search and shows the numbers it used.
Is a lower APR always the cheaper loan?
No. A longer loan can have a lower APR and still cost far more in interest, because you borrow for longer. Compare the APR and the total you repay — the calculator marks both, and says when they disagree.
Should I pay the fee in cash or add it to the loan?
Adding it to the loan costs more money — you pay interest on the fee for the whole term — but it leaves cash in hand and gives a marginally lower APR. Paying it in cash, or having it deducted, costs less overall.
Why is the lender’s APR different from mine?
Usually because a fee is counted differently: some charges are excluded by law (optional insurance you requested in writing), some are included (charges collected for third parties). Check the fee list in the statement against the fees you entered here.
Does the APR include GST on fees?
Yes, if you pay it. The tax on a fee is part of what the credit costs you, so it belongs in the APR. Enter the rate in tax on fees (18% for loan fees in India) and the calculator adds it to each fee.