Effective APR Calculator
Calculate the effective Annual Percentage Rate (APR) for loans and credit products. Understand how interest rates, fees, and compounding affect your total borrowing costs.
Step 1: Loan Details
Understanding APR
Annual Percentage Rate (APR) reflects the true cost of borrowing by including interest rates, fees, and compounding effects. Effective APR is higher than the nominal rate when compounding occurs more than once per year.
Step 2: Fees & Additional Costs
About Effective APR
Effective APR accounts for compounding interest and fees, giving you a more accurate picture of borrowing costs than the nominal interest rate alone. It helps compare different loan offers on a consistent basis.
APR Calculation Results
Effective Annual Percentage Rate (APR)
Loan Product Comparison
| Loan Type | Nominal Rate | Fees | Effective APR | Monthly Payment |
|---|
Loan Cost Analysis
Effective APR Formula
Effective APR = (1 + (Nominal Rate / n))^n – 1 + (Total Fees / Loan Amount)
The effective Annual Percentage Rate accounts for both compounding interest and loan fees. “n” represents the number of compounding periods per year. This formula gives you the true annual cost of borrowing.
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