Calculate the Annual Percentage Rate (APR) for your loan by entering the loan details below.
Your estimated APR: —%
Understanding Loan APR Calculation
The Annual Percentage Rate (APR) is a more comprehensive measure of the cost of borrowing than the interest rate alone. It includes not only the interest rate but also certain fees associated with the loan, expressed as an annual percentage. For a simple loan without explicit fees, the APR is essentially the effective annual interest rate.
How APR is Calculated (Simplified)
While official APR calculations by lenders can be complex and involve specific fee structures, a common way to estimate APR for a loan where you know the total interest paid and the loan term is by determining the effective interest rate over the life of the loan and annualizing it.
The formula used here is an approximation, as it doesn't directly account for amortization schedules which cause the actual APR calculation by lenders to be more precise. This calculator estimates the APR based on the total interest paid relative to the principal and the loan duration.
The Calculation Logic:
The core idea is to find the periodic interest rate that, when applied to the loan amount over the loan term, results in the total interest paid. Once the periodic rate is found, it's annualized.
Let:
P = Loan Amount
I = Total Interest Paid
n = Loan Term in Months
r = Monthly Interest Rate (what we need to find)
The total amount repaid is P + I.
The APR is then r * 12 * 100%.
Finding the exact monthly rate 'r' that satisfies the loan amortization equation (which accounts for principal and interest payments over time) given P, I, and n is mathematically complex and typically requires iterative methods or financial functions.
This calculator uses a simplified approach by estimating the average monthly interest as I / n and then calculating an effective annual rate based on this average.
Estimated Monthly Interest = Total Interest Paid / Loan Term (Months)
Note: This simplified APR calculation is a good estimate but may differ slightly from the APR calculated by lenders who use precise amortization formulas and may include additional fees. For exact APR, consult your loan agreement.
When to Use This Calculator:
To understand the approximate annual cost of a personal loan, auto loan, or similar credit.
To compare loan offers when you know the total interest you'll pay.
To get a general idea of the effective interest rate on a loan.
function calculateAPR() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var totalInterestPaid = parseFloat(document.getElementById("totalInterestPaid").value);
var loanTermMonths = parseInt(document.getElementById("loanTermMonths").value);
var aprResultElement = document.getElementById("aprResult");
// Clear previous results and errors
aprResultElement.textContent = "–";
// Input validation
if (isNaN(loanAmount) || loanAmount <= 0) {
alert("Please enter a valid loan amount greater than zero.");
return;
}
if (isNaN(totalInterestPaid) || totalInterestPaid < 0) {
alert("Please enter a valid total interest paid (cannot be negative).");
return;
}
if (isNaN(loanTermMonths) || loanTermMonths <= 0) {
alert("Please enter a valid loan term in months greater than zero.");
return;
}
// Simplified APR calculation
// Calculate the average monthly interest payment
var averageMonthlyInterest = totalInterestPaid / loanTermMonths;
// Calculate the estimated APR
// APR = (Average Monthly Interest / Loan Amount) * 12 months * 100%
var estimatedAPR = (averageMonthlyInterest / loanAmount) * 12 * 100;
// Display the result, formatted to two decimal places
aprResultElement.textContent = estimatedAPR.toFixed(2);
}