APR calculator
Estimate APR (annual percentage rate) for a fixed-rate loan using the interest rate, term, and any fees.
This calculator assumes fixed monthly payments and a fixed interest rate.
Results
These are estimates based on your inputs.
How this calculator works
We calculate the monthly payment from the interest rate and term, then solve for the APR that makes the present value of repayments match the cash you actually receive after fees.
APR is higher than the interest rate when fees are added because the same repayments are made on a lower cash amount received.
What this calculator does
This APR calculator estimates the annual percentage rate for a fixed-rate loan. APR reflects both interest and fees, so it gives a more complete cost comparison between lenders.
Use it to compare loans with different fees or promotional rates.
How the formula works
We first calculate the monthly payment using the nominal interest rate and term. We then solve for the APR that makes the discounted value of repayments equal to the net cash received after fees.
If fees are added to the loan, the balance is higher and repayments increase. If fees are paid upfront, the cash received is lower, which also increases APR.
Worked example
Example: borrow £10,000 over 36 months at 8.9% with a £150 fee paid upfront. The monthly payment is about £317. The APR is slightly higher than 8.9% because the fee reduces the cash received.
If the fee is added to the loan balance instead, the APR increases because you repay interest on the fee too.
Common mistakes
- Comparing interest rates instead of APR.
- Ignoring upfront fees when comparing offers.
- Using years instead of months for the term.
- Assuming a variable rate stays fixed for the whole term.
When to use this calculator
Use this when comparing loans with different fees or promotional rates. If you only need the repayment amount, use the Loan repayment calculator instead.
FAQs
Is APR the same as the interest rate?
No. APR includes fees and other costs, so it is often higher than the advertised interest rate.
Does APR include insurance?
Not usually. Optional insurance or add-ons may increase your total cost but are not always included.
Why does APR change with fees?
Fees reduce the amount you receive or increase the balance you repay, which raises the effective rate.