APR Calculator
Estimate the annual percentage rate on a loan — from finance charges or from your payment and term.
APR Calculator — input your values
What does this financial calculator do?
The APR calculator estimates the true annual cost of a loan in two common situations. For short-term single-payment loans it annualizes the finance charges directly: APR = (charges ÷ amount) × (365 ÷ days) × 100.
For amortized loans it works the calculation backwards, finding the monthly rate that produces your payment and term, then multiplying by 12. Both answers show how expensive short-term and installment borrowing really is.
Formula and variables
For amortized loans, APR is found from the payment that solves the annuity formula; it is not simply the interest rate when fees are involved.
| Symbol | Meaning |
|---|---|
| Finance charges | Fees and interest charged on the loan |
| Loan amount | Money borrowed |
| Days | Loan term in days |
Worked example
A $1,000 payday loan that charges $100 in fees and must be repaid in 14 days.
- Charges as a share: $100 ÷ $1,000 = 0.10.
- Annualize: 0.10 × (365 ÷ 14) = 2.607.
- APR = 2.607 × 100 = 260.7%.
Answer: An APR of about 260.7% — extremely expensive credit.
Tips and common mistakes
Tips
- Compare loans by APR, never by the dollar amount of fees alone — the APR puts different terms on the same scale.
- Payday-style loans have triple-digit APRs; exhausting cheaper options first usually saves hundreds of dollars.
- For credit cards, the APR applies to the balance you carry, so paying in full each month costs nothing.
- Ask lenders for the APR in writing; the legal requirement to disclose it makes comparison straightforward.
Common mistakes to avoid
- Treating the quoted interest rate as the APR on loans with fees — the APR is always at least as high.
- Annualizing a short-term rate with 12 months instead of 365 days, which understates it badly.
- Comparing a payday-style loan APR with an amortized loan APR without noting the different repayment schedules.
APR Calculator — frequently asked questions
What is the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal; the APR adds fees and expresses the total as an annual rate. When fees exist, APR is higher than the interest rate.
Why is the APR on payday loans so high?
A $100 fee on a $1,000, 14-day loan is 10% of the loan in two weeks. Annualizing that short window gives an APR above 260% — the annualized rate makes the true cost visible.
How do I calculate APR from a monthly payment?
Find the monthly rate r such that payment = P × r ÷ (1 − (1 + r)^−n), then multiply r by 12. This calculator searches for that rate automatically.
What is a good APR?
Well-qualified borrowers see mortgage APRs around 6% to 7% and credit card APRs of 18% to 25%. Anything above 36% is generally considered predatory.
Does a longer loan term lower the APR?
No — the term does not change the APR, which is an annualized rate. Longer terms lower the payment but can increase total interest paid.
Is the APR the same as the total cost?
No. APR is an annualized percentage for comparing loans; the total cost is the actual dollars paid — amount plus all finance charges over the life of the loan.