# APR Calculator

APR Calculator

Loan Amount:
Loan Fees:
Interest Rate (%):
Loan Tenure (Months):
Closing Fees:
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### APR Formula:

The direct-ratio APR formula is:
a = 6M * B/(3C(N+1) + B(N+1))

The constant-ratio formula is:
a = 2M * B /(C(N+1))

The N-ratio formula is:
a = M(95N + 9) * B/(12N(N+1)(4C + B))

Where:
a: APR
M: Number of payments per year
B: Total finance charges
F: Closing Fees
N: Pay terms
C: Initial loan amount

### APR Definition

APR stands for “Annual Percentage Rate” and is a financial term for the rate of interest plus any finance fees an individual would pay on a loan or credit card amortized over the course of 12 months. APR is meant to denote the total cost associated with borrowing money from a financial institution.

For example, if you took out a \$2,000 auto loan from your bank and the APR is 10%, at the end of the year you would owe an additional \$200 on top of your principal loan amount. This is a basic example, but not every scenario will be so straightforward. To eliminate any room for error, our easy to use APR calculator will make sure you have all the information you need at your disposal prior to applying for a loan or line of credit.

What types of transactions involve APR?

The most common types of situations where you will need to understand and calculate your annual percentage rate will be for any type of borrowing you might do from a bank or financial institution. Any time you are applying for an auto loan, mortgage, line of credit, credit card, or other type of loan you will need to be prepared to negotiate and agree upon the percentage rate you will be committed to paying annually.

What are the components used to calculate APR?

• Loan Amount – the principal amount of money you are borrowing for your loan.
• Loan Fees – any additional financial fees outside of interest charges that will be added to the total principal amount of the money you are borrowing.
• Interest Rate – finance charges that are applied on top of the principal loan amount you borrow expressed as a percentage of the total amount you borrow. Interest rates offered are calculated based on a variety of factors, but the biggest determination in what rate you will get is how good your credit score is. Your credit score will tell your lending professional if you are reliable and have a history of making payments on time. The higher your credit score, the better chance that you will get a lower interest rate. This is because the bank is taking a lower amount of risk by lending you money since there is historical data suggesting you will be able to make your loan payments on time.
• Loan Tenure – the term of the loan also known as the length of months that you will be required to make payments for until your principal and interest are completely paid off.
• Closing Fees – most often associated with mortgages through a bank and are the additional fees tacked on to the price of purchasing a home during the closing period of the sale. Closing fees include but are not limited to:
• Real Estate Agent commission
• Permits and filing fees
• Inspection fees
• Appraisal fees
• Title/Homeowners Insurance
• Attorney fees
• Taxes

How to get the best Annual Percentage Rate?

When applying for any type of loan or financial product, it is extremely important to do thorough research and shop around for the best rate. Just about every bank, credit union, or financial firm has extensive information about the loan, credit card, and other types of products they have available on their websites.

If you spend a little time gathering information from different lenders and brushing up on some key financial terminology you will be at a major advantage when negotiating the lowest rate. Having information on competitor rates will be the exact leverage you need to convince your Account Representative to give you a lower rate.

It is strongly recommended that you know your credit score and what is on your credit report before you even walk in the door. This will be one of the biggest factors when determining your APR and any negative surprises will work against you.

### How to Calculate APR

Let's be honest - sometimes the best apr calculator is the one that is easy to use and doesn't require us to even know what the apr formula is in the first place! But if you want to know the exact formula for calculating apr then please check out the "Formula" box above.

### Add a Free APR Calculator Widget to Your Site!

You can get a free online apr calculator for your website and you don't even have to download the apr calculator - you can just copy and paste! The apr calculator exactly as you see it above is 100% free for you to use. If you want to customize the colors, size, and more to better fit your site, then pricing starts at just \$29.99 for a one time purchase. Click the "Customize" button above to learn more!