APR Calculator
Loan Details & Fees
APR Results
| Monthly Payment (P&I) | — |
|---|---|
| Annual Percentage Rate (APR) | — |
| Total Finance Charges | — |
| Total Cost of Loan | — |
Interest Rate vs. Annual Percentage Rate (APR)
The **interest rate** is the basic cost of borrowing the principal amount of a loan. The **Annual Percentage Rate (APR)** is the true cost of borrowing because it factors in both the interest rate and any upfront finance charges or broker fees.
How APR is Calculated
First, the monthly payment ***M*** is computed using the base loan amount and nominal interest rate. Next, we determine the net proceeds ***L_net = Principal - Fees***.
Finally, we solve for the rate ***i_apr*** that satisfies the present value equation:
- ***L_net = M × [ 1 - (1 + i_apr)⁻ⁿ ] / i_apr***
Solving this equation requires an iterative numerical root-finding algorithm. The resulting monthly rate is annualized: ***APR = i_apr × 12 × 100***.
Disclaimer. This calculator is for informational purposes only. Actual loan fee components, mortgage insurance rules, and title costs can vary between credit unions and lenders.