Fixed Rate to Apr Calculator

Fixed Rate to APR Calculator

Determine the true cost of your loan by factoring in upfront fees.

(Points, Origination, Closing Costs)

Calculation Results

Advertised Fixed Rate

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Estimated APR

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The true annual cost of borrowing.

Monthly Payment

–

(Principal & Interest only)

function calculateAPR() { var loanAmountStr = document.getElementById('loanAmount').value; var fixedRateStr = document.getElementById('fixedRate').value; var loanTermYearsStr = document.getElementById('loanTermYears').value; var totalFeesStr = document.getElementById('totalFees').value; if (loanAmountStr === "" || fixedRateStr === "" || loanTermYearsStr === "") { alert("Please fill in Loan Amount, Fixed Rate, and Loan Term."); return; } var P = parseFloat(loanAmountStr); // Principal var annualRatePct = parseFloat(fixedRateStr); var years = parseInt(loanTermYearsStr); var fees = totalFeesStr === "" ? 0 : parseFloat(totalFeesStr); if (isNaN(P) || isNaN(annualRatePct) || isNaN(years) || isNaN(fees) || P <= 0 || years 0 && fundedAmount > 0) { var tolerance = 0.0000001; var maxIter = 50; for (var i = 0; i < maxIter; i++) { // Avoid division by zero if rate guess hits 0 if (aprMonthly <= 0.0000001) aprMonthly = 0.0000001; var rn = Math.pow(1 + aprMonthly, n); // Function f(rate) = PV of payments – Funded Amount = 0 var f_val = (monthlyPayment / aprMonthly) * (1 – (1 / rn)) – fundedAmount; // Derivative f'(rate) var f_prime = (monthlyPayment / aprMonthly) * ((n / (rn * (1 + aprMonthly))) – ((1 – (1/rn))/aprMonthly)); var next_apr = aprMonthly – (f_val / f_prime); if (Math.abs(next_apr – aprMonthly) 1) aprMonthly = 1; if (aprMonthly < -0.5) aprMonthly = -0.5; } } else if (fundedAmount 0 && diff > 0.001) { noticeDiv.innerHTML = 'Because of the $' + fees.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + ' in upfront fees, your APR is ' + diff.toFixed(3) + '% higher than your fixed interest rate.'; } else { noticeDiv.innerHTML = 'With no upfront fees, your APR is equal to your fixed interest rate.'; } }

When shopping for a mortgage or a large loan, borrowers are often confused by the two different percentage rates advertised: the Fixed Interest Rate (or "note rate") and the Annual Percentage Rate (APR). While they seem similar, understanding the difference is crucial to finding the truly lowest cost loan.

What is the Fixed Interest Rate?

The fixed interest rate is the base cost of borrowing money. It is the percentage used to calculate your monthly principal and interest payments. For example, if you borrow $300,000 at a 6.5% fixed rate over 30 years, your monthly payment (excluding taxes and insurance) is calculated strictly using that 6.5% figure.

What is the Annual Percentage Rate (APR)?

The APR is a broader measure of the cost of borrowing. It reflects not just the interest rate, but also the upfront fees and costs associated with obtaining the loan. The APR is designed to give you a standardized way to compare loans from different lenders who might have different fee structures.

Lenders are legally required to disclose the APR. It essentially answers the question: "If I spread all the upfront loan costs over the life of the loan and added them to the interest rate, what would the effective annual rate be?"

Which Fees Are Included in APR?

The APR calculation generally includes fees that are required to get the loan, such as:

• Discount Points: Money paid upfront to lower the fixed interest rate.
• Origination Fees: Fees charged by the lender for processing the application.
• Mortgage Insurance Premiums (MIP/PMI): Often included if applicable.
• Closing Costs: Certain administrative costs like underwriting or processing fees.

Why is APR Usually Higher Than the Fixed Rate?

Unless a loan has absolutely zero fees (a "no-cost" loan), the APR will almost always be higher than the fixed interest rate. This is because the APR adds the burden of those upfront costs onto the interest rate.

For example, a loan with a lower fixed rate but very high fees might actually have a higher APR (and be more expensive overall) than a loan with a slightly higher fixed rate but very low fees.

Using the Fixed Rate to APR Calculator

This calculator helps you see the impact of fees on the true cost of your loan. By inputting the loan amount, the advertised fixed rate, the term, and the total dollar amount of upfront fees, the calculator determines the effective APR.

Use this tool when comparing loan estimates. If Lender A offers 6.5% with $5,000 in fees, and Lender B offers 6.75% with $500 in fees, the APR will tell you which loan is actually cheaper over the full term.