## Calculator Use

The Advanced APR Calculator finds the effective annual percentage rate (APR) for a loan (fixed mortgage, car loan, etc.), allowing you to specify interest compounding and payment frequencies. Input loan amount, interest rate, number of payments and financing fees to find the APR for the loan. You can also create a custom amortization schedule for loan principal + interest payments.

See the Basic APR Calculator for simple APR calculations.

- Loan Amount
- The original principal on a new loan or remaining principal on a current loan.
- Interest Rate
- The annual interest rate or stated rate on the loan.
- Compounding
- The frequency or number of times per year that interest is compounded. If compounding and payment frequencies do not coincide, we convert interest to an equivalent rate to sync with payments and then perform calculations in terms of payment frequency.
- Number of Payments
- The total number of payments required to repay the loan.
- Payment Frequency
- How often payments are made.
- Payment Amount
- The amount to be paid at each payment date.

## What is APR?

APR is the annual rate that is charged for a loan, representing the actual yearly cost of a loan over the term of the loan. This includes financing charges and any fees or additional costs associated with the loan such as closing costs or points. (Some fees are not considered "financing charges" so you should check with your lending institution.)

If you take a mortgage for $100,000 at an interest rate *i* with no additional fees then
*i* is likely your
APR. However, if you have additional fees rolled into the loan, your
APR will be higher than the stated interest rate
*i*.

### APR Examples

Suppose you lend me $20 for a year at 10% interest. At the end of the year I will owe you 20 + (20 x 10%) = 20 + 2 = $22. Now, 2/20 = 0.10, so the APR is 10%. This is a one-year loan at an interest rate of 10% and an APR of 10%.

Now suppose you lend me $20 for a year at 10% interest, but you are also charging me a $3 fee. And I can pay you the fee at the end of the year. At the end of the year I will owe you 20 + (20 x 10%) + 3 = 20 + 2 + 3 = $25. Now, 5/20 = 0.25, so the APR is 25%. This is a one-year loan at an interest rate of 10% and an APR of 25%.

Last updated: November 5, 2023

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