APR Calculator
| APR Calculation Type |
|---|
| Enter Loan Data |
|---|
| Loan Amount | |
| Annual Interest Rate | |
| Loan Term | |
| Compound | |
| Payment Frequency | |
| Fees Paid Upfront | |
| Fees Rolled into Loan |
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Effective APR: 7.004% |
| Monthly Payment | $14,319.89 |
| Amount Financed | $102,000.00 |
| Total Interest | $43,198.93 |
| Total of 10 Payments | $143,198.93 |
| Pay Upfront | $500.00 |
| Cost of the Loan | $143,698.93 |
| Loan Distribution |
|---|
| Loan Balance, Interest Payments |
|---|
Amortization schedule
| Month | Opening balance | Interest | Principal | Ending balance |
|---|---|---|---|---|
| - | - | - | - | $102,000.00 |
| Period 1 | $14,319.89 | $6,831.13 | $7,488.76 | $94,511.24 |
| Period 2 | $14,319.89 | $6,329.59 | $7,990.30 | $86,520.94 |
| Period 3 | $14,319.89 | $5,794.47 | $8,525.43 | $77,995.51 |
| Period 4 | $14,319.89 | $5,223.50 | $9,096.39 | $68,899.12 |
| Period 5 | $14,319.89 | $4,614.30 | $9,705.59 | $59,193.53 |
| Period 6 | $14,319.89 | $3,964.30 | $10,355.59 | $48,837.94 |
| Period 7 | $14,319.89 | $3,270.77 | $11,049.13 | $37,788.81 |
| Period 8 | $14,319.89 | $2,530.79 | $11,789.11 | $25,999.70 |
| Period 9 | $14,319.89 | $1,741.25 | $12,578.64 | $13,421.06 |
| Period 10 | $14,319.89 | $898.83 | $13,421.06 | $0.00 |
What does APR mean?
Revealing the complete cost of borrowing lies in the Annual Percentage Rate (APR) — the real measure of what your loan will cost. It includes interest, fees and other charges associated with the loan that have to be paid. Because of this, APR is essential for accurate loan comparisons.
APR is officially regulated in the U.S. Under the Truth in Lending Act, lenders must display annual percentage rates so borrowers can easily compare lending offers. This calculator helps users compare offers that present costs in different ways. Despite APR being universal, it's worth saying the APR will tend to underestimate the impact of upfront costs for borrowers planning to pay their loan off more quickly or refinance it since fees get spread over fewer payments.
APR and APY — the difference
Both terms are popping up frequently but serve at borrowing money (APR) or investing (APY), where the key difference sits. Messing them up isn't correct because of the financial intent – borrow or invest.
APR is the go-to metric for loans. It stands for "Annual Percentage Rate" and represents the yearly cost of borrowing, combining the interest rate with any fees or additional charges—like origination fees or closing costs—spread out over the loan term. Think of APR as the "sticker price" of your loan. It tells you what you're paying annually without factoring in how interest might grow over time. For example, if you take out a $10,000 loan with a 5% interest rate and $200 in fees, the APR gives you a single percentage that counts in both, making it easier to compare loan offers.
APY is more relevant for savings accounts or investments and stands for "Annual Percentage Yield". It also measures an annual rate, but it includes the magic of compound interest—the interest you earn on your interest. This makes APY a more accurate picture of what you'll earn over time, rather than what you'll pay. For instance, if you put $10,000 in a savings account with a 5% interest rate that compounds monthly, the APY will be slightly higher than 5% because of that compounding effect. However, for loans, APR is typically used because compounding isn't always a factor in the same way—lenders want you to focus on the base cost.
Why does this matter? Imagine you're comparing two loan offers: one advertises an APR of 5%, and another touts an APY of 5%. At first glance, they might seem equal, but they're not. The APR loan sticks to a straightforward 5% cost, while the APY loan implies compounding, which could increase what you owe over time depending on the terms. For borrowers, sticking to APR keeps things simple and consistent.
Fixed APR or Variable APR
Loans with fixed APRs offer steady rates for the duration of the loan, providing payment predictability but typically starting higher than variable rates. This stability becomes valuable during periods of rising interest rates, as your costs remain constant while market rates climb.
Loans with variable APRs include rates that may change with time, rising and falling with an index such as the Federal Funds Rate. Variable rates offer potential savings when market rates decline but create uncertainty about future payments. Generally, the longer the loan term, the greater the impact of rate fluctuations, making fixed rates more attractive for long-term borrowing.
