How to read these numbers
APR (Annual Percentage Rate) folds interest and fees into one comparable number. It is an internal rate of return: the yearly rate at which what you receive equals what you repay. Fold the fees into the cash flows and the APR is your true cost of borrowing.
A worked example
Borrow $20,000 for three years. Offer A: 4.90% with a $600 fee. Offer B: 5.40% with no fee. Offer A's APR comes out near 6.12% against 5.40% for offer B — the lower nominal rate is the more expensive deal, because the $600 is paid on day one.
Assumptions and limits
- This APR is computed from your inputs and does not replace the APR a lender must disclose, which covers items this page cannot see.
- It assumes level monthly payments, a fixed rate, and fees charged when incurred. Prepayment and rate resets are not modeled.
- Loans with different terms cannot be ranked on APR alone — read the payment and total columns too. Not lending advice.
FAQ
Why is a 4.9% rate more expensive than 5.4%?
A one-time fee raises the cost of the money for the whole term — 3% on $100,000 over 3 years adds about a point.
How does APR differ from the nominal rate?
The nominal rate covers interest only. APR adds fees and required insurance. They match only when there are no fees.
Should I borrow more or stretch the term?
Check the payment you can carry, then the APR, then the total. The same $100,000 at 5% over 3 or 10 years differs on both.
What is an annual fee, and why is it separate?
Some deals charge a percentage of the balance each year instead of an origination fee — heaviest early, lighter later.
Why is my APR different from the lender's?
Lenders include forced insurance, guarantee fees and credit checks, which this page cannot know. The disclosed APR governs.
Can I compare two loans of different amounts?
APR is a ratio, so it compares across amounts. Absolute gaps such as total repaid only mean something when amounts match.
Should early payoff be included?
This page assumes the loan is repaid in full on schedule. If penalty-free payoff is allowed, the fee may not be fully paid, so the APR shown is an upper bound.
Amortizing vs balloon repayment?
Amortizing repays principal and interest monthly; a balloon defers principal to the last payment — much lower each month, much larger at the end.
Methodology
The APR comes from the cash flows: the amount plus fees at day zero, then the scheduled payments, solved by bisection on the discounted net present value and annualized. Payments use the standard amortization formula; a balloon loan pays interest only until the final payment.