APR Calculator

The interest rate prices the borrowed money and determines your payment. APR adds fees and points, so it reflects the total cost of borrowing.

APR is always equal to or higher than the note rate. If a lender quotes both and they are identical, the loan has no fees.

Usually, but not always, because APR assumes you hold the loan to term.

If you expect to move or refinance in a few years, a loan with a higher rate and no fees can cost less overall, even though its APR looks worse. Short holds favour low fees; long holds favour a low rate.

APR is used for borrowing and includes fees. APY is used for savings and includes compounding.

Both describe an effective annual rate, but from opposite sides. Lenders advertise the lower number and savings accounts the higher one, which is worth remembering when comparing anything.

It depends on how long you keep the loan. A point costs 1% of the loan and typically lowers the rate by about a quarter percent.

Divide the cost by the monthly saving to get a break-even in months. Staying past it means you gain; moving or refinancing before it means you lost money.

Because the debt is unsecured, so the lender has no asset to recover if you stop paying, and the rate has to cover that risk.

Card APRs also compound daily rather than monthly, so the effective annual cost is higher than the quoted APR suggests. A 22% APR compounded daily works out closer to 24.6%.

Some of them. Lender fees such as origination, underwriting and processing are negotiable, and vary meaningfully between lenders.

Government charges and recording fees are not. The Loan Estimate separates what you can shop for from what you cannot, which is exactly what it is designed to do.

US federal law does. The Truth in Lending Act, implemented through Regulation Z, requires lenders to disclose the APR and the finance charge before you commit, in a standard form.

The rules are written and enforced by the Consumer Financial Protection Bureau. That is the whole reason APR exists as a comparable number rather than each lender quoting whatever flatters it.

An APR that moves with an index. Most credit cards are variable and priced as prime rate plus a margin, so when the Fed raises rates and prime follows, your card APR rises within a billing cycle or two.

The margin is fixed by your agreement; the index is not. A card at prime + 14% will always sit 14 points above prime, whatever prime does.

A great deal, and more than most people expect. Scores run from 300 to 850 on the common FICO scale, and lenders price in bands rather than on a smooth curve, so crossing a boundary can move your rate noticeably.

The score itself is built mostly from payment history and how much of your available credit you are using, with length of history, new applications and credit mix making up the rest. Paying on time and keeping balances well below the limit are the two things that move it most.

You are entitled to your credit reports for free from the three national bureaus. Checking them and disputing errors is the cheapest rate reduction available, because a mistake on a report costs you real money every month.

Not federally for most lenders. State usury laws set the limits, and they differ enormously, which is why credit card issuers are often incorporated in states with no cap.

The Military Lending Act is the main federal exception, capping most consumer credit at a 36% military APR for active-duty service members and their dependents.