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APR Calculator

Loan Details

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Additional Costs

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Understanding APR

The Annual Percentage Rate (APR) represents the true cost of borrowing, including both the interest rate and additional fees. Understanding APR helps you compare different loan offers effectively.

APR vs. Interest Rate

While the interest rate only shows the cost of borrowing the principal amount, APR includes:

  • Interest rate
  • Points
  • Application fees
  • Origination fees
  • Other lender charges

Points Explained

Points are upfront fees paid to lower your interest rate. Each point equals 1% of your loan amount:

  • 1 point on a $200,000 loan = $2,000
  • Points can be negotiated with the lender
  • May be tax-deductible
  • Consider break-even period when paying points

Common Fees Included in APR

  • Application fees
  • Origination fees
  • Broker fees
  • Underwriting fees
  • Document preparation fees

Using APR to Compare Loans

  • Compare APRs from different lenders
  • Consider the loan term when comparing
  • Look at both APR and interest rate
  • Consider how long you plan to keep the loan
  • Ask about fees included in APR calculation