Why is APR higher than the stated interest rate?

APR folds in upfront fees (origination, closing costs, etc.), spreading their cost across the loan term — so a loan with fees always has a higher APR than its stated rate alone.

APR Calculator

Banking & Interest

Calculate a loan’s true APR by factoring in upfront fees on top of the stated interest rate.

Display currency

Changing the display currency only changes the symbol shown — amounts aren't converted, since this tool doesn't use live exchange rates.

Loan amount

Stated interest rate (%)

Term (years)

Upfront fees (origination, closing, etc.)

APR (true annual cost of borrowing)

vs. stated rate:

How this is calculated

Computes the standard monthly payment from the stated rate on the full loan amount, then solves numerically for the interest rate that would produce that same payment on the amount you actually receive (loan amount minus fees) — reflecting the loan’s true all-in annual cost.

Frequently asked questions

Why is APR higher than the stated interest rate?: APR folds in upfront fees (origination, closing costs, etc.), spreading their cost across the loan term — so a loan with fees always has a higher APR than its stated rate alone.

Effective Interest Rate Calculator

Calculate the true effective annual rate of a loan once compounding frequency is factored in.

Loan Calculator

Calculate the monthly payment and full amortization schedule for any fixed-rate loan.

Interest Rate Calculator

Solve for the interest rate implied by a loan’s principal, payment, and term.