Enter your loan amount, stated interest rate, term, and any origination fee to see the effective APR and the loan’s true total cost.
This tool calculates your monthly payment from the stated rate and term, then works out the effective interest rate you’re really paying once the origination fee reduces the amount you actually receive, while your payments stay based on the full loan amount.
Loan amount:
Stated annual interest rate (%):
Term (years):
Origination fee ($, optional):
How It Works
This tool calculates your monthly payment from the stated rate and term, then works out the effective interest rate you’re really paying once the origination fee reduces the amount you actually receive, while your payments stay based on the full loan amount.
How to Use This Tool
- Enter the loan amount.
- Enter the stated annual interest rate.
- Enter the loan term in years.
- Enter any origination fee charged upfront (leave blank for none).
- Click Calculate to see your effective APR and true total cost.
The effective APR shown here is always equal to or higher than the stated rate whenever a fee is charged, since you receive less money upfront but repay the same amount.
Did You Know?
- The Truth in Lending Act in the US requires lenders to disclose APR precisely because a stated interest rate alone can hide the real cost of upfront fees.
- A seemingly small origination fee can meaningfully raise a loan’s effective APR, especially on shorter-term loans where fees are spread over fewer payments.
Frequently Asked Questions
Why is the effective APR higher than the stated rate?
Because the origination fee reduces the amount you actually receive while your payments are still based on the full loan amount, so you’re effectively paying interest on money you never received.
Does this account for other types of fees, like closing costs?
It accounts for a single upfront origination-style fee entered as a dollar amount; other recurring fees would need to be factored in separately.