How to compare APR with the quoted rate
Add the costs that reduce the money you actually receive.
1
Enter the loan terms
Use the amount borrowed, the quoted rate and the full term.
2
Add upfront fees
Include origination, documentation and other lender charges.
3
Compare the rates
The gap between APR and the quoted rate is the cost of the fees.
What does this tool do?
Fees reduce the cash you actually receive while the payment stays the same, which pushes the real cost above the quoted rate. This calculator solves for the monthly rate that equates the net proceeds with the payment stream.
The Formula
Solve for r: Net proceeds = Payment × [1 − (1 + r)^−n] ÷ r; APR = r × 12Frequently Asked Questions
Why is APR higher than the interest rate?
Because origination and closing fees are deducted upfront, so you pay interest on money you did not fully receive.
Does APR include every cost?
It depends on the lender. This estimate covers the fees entered here; title, appraisal, insurance and prepayment costs may be excluded.