APR Calculator

Annual Percentage Rate (APR) represents the true cost of borrowing money, expressed as an annual percentage. Unlike the interest rate, APR includes both the interest rate and any fees or additional costs associated with the loan.

APR is an important metric for comparing loan offers because it provides a more complete picture of the cost of borrowing. Two loans might have the same interest rate but different APRs due to varying fees.

How APR is Calculated

APR is calculated by determining what annual rate would make the present value of all loan payments and fees equal to the amount of the loan. This calculation takes into account:

• The loan amount
• The interest rate
• The loan term
• All fees and additional costs
• The payment schedule