How the APR is worked out
Fees taken out of the loan are a prepaid finance charge (Regulation Z §1026.4), so you get the amount financed: the loan minus the fee. The calculator finds the monthly rate at which your payments are worth exactly the amount financed.
Regulation Z Appendix J then multiplies that monthly rate by 12. With no fee, the APR equals the note rate.
Worked example
A $15,000 loan at 11% for 4 years with a 5% origination fee ($750) costs $387.68 a month. You receive $14,250, the amount financed. The total of payments is $18,608.78, so the finance charge is $4,358.78 and the APR is 13.76%.
With no fee, the APR is 11.00%, the same as the note rate.
Amount financed, finance charge and APR
The amount financed is the credit you actually get. The finance charge is the dollar cost of the credit: interest plus fees such as origination fees and points. The APR shows that cost as a yearly rate, so it's the fairest single number for comparing offers.
What this calculator assumes
A fixed rate, equal monthly payments and fees paid at the start. Charges you'd pay in a cash deal, and most third-party fees, aren't finance charges, so leave them out.
Borrowing in the UK?
The country choices above the inputs open separate local pages. UK lenders compound the monthly rate into an effective annual APR (FCA CONC App 1.2), so the same loan shows a slightly higher APR there. Choosing United Kingdom opens that page and resets the inputs; amounts are not converted.
For a loan from a UK lender, use the UK loan APR calculator in pounds.
Inputs for the US APR calculator
What do you know?
Pick the interest rate from your offer, or the monthly payment if that's what you have.
Loan amount
The full loan in US dollars, before any fee is deducted.
Origination fee and points
Fees taken out of the loan or paid at closing to get it. Enter 0 if there are none.
Monthly payment
The payment from your offer or statement.
Interest rate (per year)
The note rate from your offer, charged monthly at one twelfth of the rate.
Term
How long you take to repay, in years. Half years such as 2.5 work.
CALCULATOR QUESTIONS
US APR calculator questions
How do you calculate the APR on a loan?
Find the monthly rate at which your payments repay the amount financed (the loan minus fees), then multiply it by 12. That's the Regulation Z method.
Why is the APR higher than my interest rate?
Origination fees and points reduce the money you receive but not your payments, so the cost per dollar you actually get is higher.
What's the difference between the finance charge and interest?
Interest is one part of the finance charge. The finance charge also counts prepaid fees such as origination fees and points.
Does a 0% loan with a fee have an APR?
Yes. Any fee you pay for the credit means your payments are more than the money you receive, so the APR is above 0%.