APR Calculator
Calculate the true Annual Percentage Rate of a loan including fees per TILA definition.
Read the Guide
Calculate the true Annual Percentage Rate of a loan including fees per TILA definition.
Read the GuideOrigination fees, points, etc.
The nominal rate is the stated interest rate on a loan. APR (Annual Percentage Rate) is a broader measure that includes fees spread over the loan's life, expressed as an annualized rate. Under TILA (Truth in Lending Act), lenders must disclose APR so borrowers can compare offers fairly.
APR = IRR(cash flows) × 12 | Net Proceeds = Loan Amount − Fees | Monthly Payment = P × [r(1+r)^n] / [(1+r)^n − 1]A $20,000 loan at 4% nominal rate with $2,000 in origination fees over 36 months can have an APR over 7%. The advertised rate looks attractive, but fees significantly increase the true cost. Always compare APRs when shopping for loans.
Lender A offers 5.5% with no fees. Lender B offers 4.9% with $500 in fees. On a $15,000/36-month loan, Lender B may actually have a higher APR despite the lower rate. APR is the only fair basis for comparison.
APR is computed using Newton-Raphson iteration to find the monthly IRR on net proceeds (loan minus fees), then annualised by multiplying by 12. This follows TILA disclosure methodology.