APR Calculator

The interest rate is the cost of borrowing the principal loan amount. APR is the annualized cost of that interest, plus upfront fees (points, origination fees, etc.), expressed as a percentage. A loan with a 5% interest rate might have a 5.5% APR after fees are included.

Usually, yes — when comparing loans with the same term and amount, lower APR means lower total cost. However, you should also consider the total cash you'll pay out, not just the percentage. A loan with slightly higher APR but lower fees upfront might cost less overall if you plan to keep it a long time.

Included: origination fees, points, broker fees, underwriting fees, and other charges that are finance charges under Regulation Z. Not included: appraisal, title insurance, recording fees, property taxes, homeowners insurance, and other third-party service charges.

No. APR includes the interest rate plus fees, so it is always equal to or higher than the interest rate. When there are no fees, APR equals the interest rate exactly.

For a fixed-rate loan, your APR is locked in at closing and will not change. For an adjustable-rate mortgage (ARM), the initial APR is fixed for a period (often 3, 5, 7, or 10 years), then adjusts periodically based on market rates.

No. APR (Annual Percentage Rate) is the annualized cost of borrowing. APY (Annual Percentage Yield) is used for savings accounts and investments, and factors in compound interest. They use different formulas and are not directly comparable.

Credit card APR is calculated differently from loan APR. It is a periodic rate (monthly or daily) multiplied by 12 or 365. Credit card APRs are usually higher than loan APRs because credit cards are unsecured debt and carry more risk for the lender.

Under Regulation Z (Truth in Lending Act), a disclosed APR is considered accurate if it is within one-eighth of one percentage point (0.125%) of the actuarial value. A small difference between this calculator and your lender's disclosure is normal and expected.