APR Calculator
Estimate the true annual percentage rate of a loan including fees, with monthly payment and total cost breakdown.
Total fees and interest charged over the loan life, in dollars.
Annual percentage rate (APR)
2.95%
Approximate, including fees
Monthly payment
$358.33
$21,500 total over 5 years
Finance charge
$1,500
Total cost
$21,500
$20,000 borrowed
APR factors in fees on top of the interest rate, giving a truer cost of borrowing than the nominal rate alone.
How it works
APR = (finance charge ÷ loan amount) ÷ term in years × 100. More precisely with monthly compounding: rate solving payment = charge-rolled amount.
Example: $20,000 loan with $1,500 finance charge over 5 years → APR ≈ 7.4%.
Last updated: April 2026
How this calculator is verified
Checked by True Calculator automated test suite on
- Formula verified against a published worked example in the automated test suite
- Edge cases (zero, negative, boundary and unit-mismatch inputs) covered by unit tests
The full verification method is on our how we verify page. Found an error? Tell us and we will re-check it.
When to Use This Calculator
Use the APR calculator when two loan offers quote different interest rates and you want to compare them honestly, because the rate on the brochure is not the cost you pay. Indian lenders commonly add processing fees, documentation charges and other upfront costs, and the annual percentage rate folds these into one number that can be compared across offers. Car buyers and personal loan applicants use it before signing, and credit card users can run their card's rate through the same tool to see the real annual cost of revolving a balance. Because the monthly payment and total cost are shown alongside, the APR view makes visible what a seemingly small difference in fees does to the final bill, which is exactly the information a borrower needs before committing.
How to Use This Calculator
- Step 1: Enter the loan amount you are borrowing.
- Step 2: Enter the total finance charge — interest plus all fees and charges over the term.
- Step 3: Enter the loan term in years.
- Step 4: Read the approximate APR, the monthly payment and the total cost of the loan.
Worked Example
Suppose you borrow ₹5,00,000 and the total finance charge — interest, processing fees and charges — is ₹60,000 over 3 years. The total cost is ₹5,60,000, the monthly payment is about ₹15,556 and the tool reports an approximate APR of about 7.78% using the rule of 78. The APR is the figure to compare between offers, because the interest rate alone ignores fees.
Tips and Common Mistakes
- •Tip 1: The APR here is an approximation based on the rule of 78; Indian banks quote effective annual rates on the reducing balance, so compare like with like.
- •Tip 2: Include processing fees and verification charges in the finance charge — that is exactly what the APR is meant to surface.
- •Tip 3: On credit cards at 36-48% a year with late fees, the APR including fees runs far above the advertised rate.
- ✗Mistake 1: Entering only the interest when the finance-charge field expects the full cost of credit.
- ✗Mistake 2: Comparing APRs computed on different terms — the rule-of-78 figure is term-dependent and not directly comparable.
Frequently Asked Questions
What is the difference between APR and interest rate?
The interest rate only covers the loan's interest. The APR adds the finance charges — fees and other costs — and expresses the true annual cost of borrowing, so it is almost always higher.
How do I calculate APR?
APR = (finance charge ÷ loan amount) × (number of periods per year ÷ loan term in periods) × 100. Enter the amount, total finance charge and term and the calculator does the work.
Why is APR important when comparing loans?
Because two loans with the same advertised rate can have different fees, the APR lets you compare the real cost of each offer on a like-for-like basis.
Is this APR calculator free to use?
Yes, True Calculator's APR calculator is completely free with no sign-up, no app install and no usage limits.
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