Loan APR Calculator

A loan's stated interest rate does not tell the whole story. Enter the rate and origination fee to see the effective APR, the true annual cost of borrowing.

Understanding APR vs Interest Rate

The interest rate is what the lender charges on the outstanding loan balance. The APR (Annual Percentage Rate) includes the interest rate plus any mandatory fees, giving you a more accurate picture of the total annual cost of borrowing. Federal law requires lenders to disclose the APR so consumers can compare offers on equal footing.

Origination fees are the most common fee that causes the effective APR to differ from the stated rate. An origination fee is typically deducted from the loan proceeds at funding. For example, if you borrow $15,000 with a 3% origination fee, you receive $14,550 but repay based on the full $15,000. This gap between what you receive and what you repay effectively increases the true cost of the loan.

When comparing loan offers, always use the APR rather than the stated rate. A loan with a lower stated rate but a high origination fee may actually cost more than a loan with a higher stated rate and no fee.