APR Calculator — Find the True Cost of Any Loan
Calculate the APR on any loan including fees and charges to compare the true cost of borrowing. Works for mortgages personal loans credit cards and auto loans in 2026.
The Annual Percentage Rate is the single most important number for comparing loans because it includes not just the interest rate but also fees processing charges and other costs spread over the loan term. A loan with a lower interest rate but higher fees can actually be more expensive than one with a higher rate and no fees. The APR reveals this true cost. Lenders in both the US under TILA and India under RBI guidelines are required to disclose APR helping borrowers make fair comparisons.
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Key Information
| Parameter | Details |
|---|---|
| APR Components | Interest + all fees annualized |
| Credit Card Avg APR (2026) | 22% - 28% |
| Personal Loan Avg APR | 8% - 36% |
| Mortgage Avg APR | 6.5% - 7.5% |
Frequently Asked Questions
What is the difference between interest rate and APR?
The interest rate is the cost of borrowing the principal amount while APR includes the interest rate plus additional costs like origination fees closing costs discount points and mortgage insurance all expressed as an annual rate. For example a mortgage with a 6.5% interest rate might have an APR of 6.8% after including origination fees and points. APR is always equal to or higher than the stated interest rate.
Why do credit cards have such high APR?
Credit cards have APRs of 22-28% because they are unsecured debt meaning the lender has no collateral if you do not pay. Mortgages have much lower APR because your home serves as collateral. Credit cards also offer a grace period where you pay 0% interest if you pay the full balance each month. The high APR only applies to balances carried month to month making paying in full each billing cycle the best strategy.
How is APR calculated?
APR is calculated by taking the total cost of borrowing including interest and all mandatory fees dividing by the loan amount dividing by the number of days in the loan term and multiplying by 365. The formula standardizes different fee structures into a single comparable number. For variable rate products the APR may change over time based on index rate movements.
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Last updated: 24 March 2026