The concept
APR and nominal interest
APR attempts to express interest and certain borrowing costs as one annualized rate. Which fees must be included depends on the governing disclosure rules.
This calculator is a mathematical estimate, not a regulatory disclosure.
The method
How the calculation works
The nominal rate determines scheduled payments on the full loan amount. Entered fees reduce net proceeds. The calculator solves for the monthly rate that equates those proceeds with the payment stream.
The monthly discount rate is solved numerically and multiplied by twelve. Regulatory APR methods can differ.
Worked example
A neutral example
A $100,000 loan at a 6% nominal rate for 60 months with $2,000 in upfront fees produces an estimated APR above 6%.
This example explains the method. It does not recommend a financial action or predict an outcome.
Frequently asked
APR Calculator questions
Is this a legally compliant APR disclosure?+
No. Rules and included charges vary by jurisdiction.
Why does adding fees raise APR?+
The borrower receives less net value while making the same scheduled payments.
What if fees equal the loan amount?+
The estimate is undefined because net proceeds are zero.