How to Calculate Personal Loan APR
6 min read · Updated September 26, 2026 · by Thomas M, Registered Investment Adviser (South Carolina)
Two loans with the same interest rate can cost very different amounts once fees are included. APR — the annual percentage rate — is the measure that puts them on equal terms. This guide shows how it is calculated.
Interest rate versus APR
The interest rate only prices the money borrowed. APR also counts fees such as the origination fee, expressed as an annual rate on the money you actually receive. With no fee they are equal.
Worked example
A $15,000 loan at 11% over 48 months with a 5% origination fee has payments of $387.68. The fee is $750.00, so you receive $14,250.00. APR is the rate that makes those payments worth exactly the cash received: 13.76%.
Comparing offers
| Offer | APR |
|---|---|
| 9.5% rate, no fee | 9.5% |
| 8% rate, 4% fee | 10.14% |
| 7% rate, 8% fee | 11.38% |
The lowest headline rate is not always the cheapest loan.
Before you sign
- Compare total cost of borrowing (interest + fees).
- Check for prepayment penalties.
- Prefer the shortest term you can afford.
Use the personal loan calculator to test offers.
Practice questions
Test yourself, then tap to check. Answers are calculated by the tools linked below.
- A $10,000 loan at 9.9% for 36 months with a 4% origination fee. What is the APR?
Show answer
Monthly payment: $322.20 · APR (including the fee): 12.73%
- A $15,000 car loan at 7.5% over 4 years. What is the payment?
Show answer
Monthly payment: $362.68
- A $24,000 car, $2,000 down, no trade-in, 7% tax, $400 fees, 7.2% for 48 months. What is the monthly payment?
Show answer
Monthly payment: $578.86
Frequently asked questions
What is APR?
The annual cost of borrowing including fees, expressed as a percentage.
Does the origination fee reduce what I receive?
Usually yes — it is deducted from the loan, so you receive less than you borrow but repay the full amount.
Is a lower interest rate always better?
No. A low rate with a high fee can have a higher APR than a higher rate with no fee.
How is APR calculated?
By finding the rate at which the loan’s payments equal the cash received, then annualising it.
Try it yourself
Personal Loan CalculatorSee the monthly payment, total interest and the true APR of a personal loan including its origination fee.Loan CalculatorEstimate loan payments and see how extra payments cut interest and time.Auto Loan CalculatorWork out a car loan’s monthly payment, interest and total cost with down payment, trade-in, sales tax and fees.Keep learning
How to Calculate a Car Loan Payment6 min readHow Mortgage Payments Work7 min readHow Compound Interest Works7 min readReviewed by Thomas M, Registered Investment Adviser (South Carolina), who launched his own financial advisory firm in 2010. Spot a mistake? Tell us. See our editorial policy. Finance content is educational and not financial advice; see the disclaimer.