APR Calculator
Turn an APR into a real monthly payment and compare the true cost of borrowing.
APR, the annual percentage rate, is the yearly cost of a loan including fees, which makes it the fairest way to compare offers. Enter the loan amount, the APR, and the term to see the monthly payment. On a $25,000 loan at 9% APR over 5 years the payment is about $519. The lower the APR, the less the loan costs.
These results are estimates for informational purposes only and are not financial, tax, or legal advice. Your actual figures from a lender or the IRS may differ. Consult a qualified professional before making decisions.
Estimated monthly payment
$518.96
Principal vs. interest paid per year
Amortization schedule
| Year | Principal | Interest | Balance |
|---|---|---|---|
| 1 | $4,146 | $2,082 | $20,854 |
| 2 | $4,535 | $1,693 | $16,320 |
| 3 | $4,960 | $1,267 | $11,360 |
| 4 | $5,425 | $802 | $5,934 |
| 5 | $5,934 | $293 | $0 |
About the APR Calculator
APR measures the yearly cost of borrowing as a percentage, and unlike the plain interest rate it folds in lender fees, so it reflects what the loan actually costs you. That is why federal lending rules require lenders to disclose it, and why comparing two loans by APR is more honest than comparing their headline rates. This calculator takes the APR you were quoted and the term, and returns the monthly payment and total cost so you can line up offers on equal footing. A loan with a lower interest rate but heavy origination fees can carry a higher APR than one with a slightly higher rate and no fees, which is exactly the kind of difference the rate alone hides. One caveat: APR spreads fees evenly across the full term, so it understates the cost if you repay early, when those upfront fees have not had the full term to amortize. For most borrowers holding a loan to maturity, APR is still the single best number for comparison.
Frequently asked questions
What is the difference between APR and interest rate?+
The interest rate is the cost of borrowing the principal alone. APR adds in lender fees such as origination charges, so it is usually a little higher and gives a truer picture of the loan's annual cost. Compare loans by APR.
Is a lower APR always better?+
Generally yes, since a lower APR means a lower total cost for the same loan. The exception is if you plan to repay very early, because APR assumes you hold the loan for the full term and spreads upfront fees across it.
Does APR include compounding?+
APR reflects fees but not the effect of compounding within the year; that is what APY measures. For a standard installment loan with monthly payments, APR is the figure lenders disclose and the one to compare across offers.
How can I get a lower APR?+
Improve your credit score, shop several lenders, and ask about loans with no origination fee. A larger down payment or a shorter term can also lower the APR a lender offers, since both reduce the lender's risk.