APR Calculator
Calculate the true annual percentage rate (APR) of a loan once fees are factored in - a more complete measure than the stated interest rate alone.
Origination, points, closing costs
Effective APR
7.058%
The APR is higher than the stated rate because fees effectively reduce the amount you receive while you still repay based on the full loan amount.
What Your Result Means
APR reflects the true cost of borrowing, combining your interest rate with any fees. It's always equal to or higher than your stated interest rate, and it's the number regulators require lenders to disclose so you can fairly compare loan offers.
How It Is Calculated
Calqora calculates your monthly payment from the stated rate and loan amount, then solves for the interest rate that would produce that same payment if you had only received the loan amount minus fees - that solved rate, annualized, is the APR.
Worked Example
A $20,000 loan at 6% interest with $500 in fees over 5 years has a stated rate of 6% but an effective APR closer to 6.5%, since you're repaying based on the full $20,000 while only receiving $19,500 in usable funds.
Important Assumptions
- Uses a standard APR approximation - actual lender-disclosed APR may include additional regulatory calculation rules.
Frequently Asked Questions
- Why is APR always higher than the interest rate?
- Because fees are subtracted from what you actually receive, but you repay the full loan amount - so the effective cost of the money you actually get is higher than the stated rate alone.
- Should I compare loans by rate or APR?
- APR, since it accounts for fees and gives a more apples-to-apples comparison between loan offers with different fee structures.
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Methodology
This calculator uses a numerical bisection method to solve for the effective rate. See our methodology page for details.
This calculator provides estimates for educational purposes only. Actual rates, taxes, insurance, fees, and lender terms may differ. It does not constitute financial advice - consult a qualified financial professional before making financial decisions.