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APR calculator (annual percentage rate)

The yearly cost of borrowing, with fees and compulsory insurance included.

APR calculator

The amount lent, before any fee is taken off.

£
What do you know?

The nominal rate in the agreement, before fees and insurance, for example 5.5.

%

The number of monthly payments, for example 48 for 4 years.

Arrangement, broker or guarantee fees, paid or held back when you receive the money. Leave empty if there are none.

£

Only if the lender requires them to grant the loan, such as compulsory insurance.

£

APR

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Enter the amount, the rate or the payment, and the term to see the APR.

Interest rate per year
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Equivalent monthly rate
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Monthly payment without insurance
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Total interest
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Total charge for credit
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Total amount payable
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Recent calculations

Nothing yet: copy, export or save a calculation to find it here.

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See all 14 apps in Loans and credit

How it works

Enter the amount borrowed, the interest rate or the monthly payment, the term, and any fees or insurance the lender requires. You get the APR, the total charge for credit and the total amount payable, with the workings. The calculator uses the APR equation of UK consumer credit rules for a loan repaid in equal monthly payments, the first one month after you receive the money. It is not for loans secured on land, such as mortgages: the Consumer Credit (Total Charge for Credit) Regulations 2010, whose equation it uses, did not apply to them.

Start from the rate or the payment

Choose 'The interest rate' and the calculator works out the monthly payment, rounded to the penny, and treats every payment as that amount; at a 0% rate the last one is adjusted by a few pence so that exactly the amount borrowed is repaid. Choose 'The monthly payment' to enter the figure from your quote or agreement: the calculator then shows the interest rate it implies.

Add the fees and insurance you must pay

The APR counts the costs you have to pay in connection with the credit and that the lender knows about, such as an arrangement fee, a broker fee or insurance you must take out to get the loan on the terms offered. Optional insurance and charges for missed payments are left out. Enter fees paid upfront in one field and monthly charges in the other.

If the fee is added to the loan

Some lenders add the arrangement fee to what you owe instead of taking it upfront. Enter the amount you actually receive as the amount borrowed, choose 'The monthly payment' and enter the payment from your quote: the fee is already inside it.

Read and reuse the result

The APR is rounded to one decimal place, a 5 or more in the next place rounding up: the rules ask for at least that precision. The same rules apply in England, Wales, Scotland and Northern Ireland. Copy the workings, export them as a CSV file or save them to Priostack.

Amount received = amount borrowed − upfront fees.

APR equation: amount received = Σ (payment + monthly charges) ÷ (1 + APR)^(k ÷ 12), for k = 1 to n payments.

The calculator finds the monthly rate r that balances the equation, then APR = (1 + r)^12 − 1, a year being 12 equal months.

From the interest rate: payment = amount × (rate ÷ 12) ÷ (1 − (1 + rate ÷ 12)^−n), rounded to the penny.

Example: £7,500 over 60 months at 6.9%, with a £295 arrangement fee

The monthly payment is £148.16, and you receive £7,500 − £295 = £7,205. The monthly rate that balances £7,205 against 60 payments of £148.16 is 0.716448%, so the APR is (1 + 0.716448%)^12 − 1 = 8.9%, against 7.1% without the fee. The total charge for credit is £1,684.60 (£1,389.60 of interest and the £295 fee) and the total amount payable £9,184.60.

Frequently asked questions

What is the difference between the interest rate and the APR?

The interest rate is what the lender uses to work out the interest. The APR is the total cost of the credit as a yearly rate: it adds the fees and compulsory insurance, and it compounds the monthly cost over a year. Even with no fees, a 6% interest rate paid monthly is equivalent to (1 + 0.5%)^12 − 1 = 6.17% a year, shown as 6.2% APR.

Which costs go into the APR?

All the costs you are required to pay in connection with the credit agreement that the lender knows about: interest, commissions, taxes and fees, whether paid to the lender or to someone else, and insurance you must take out to get the credit on the terms offered. Charges for not keeping to the agreement, such as late payment fees, are left out (Consumer Credit (Total Charge for Credit) Regulations 2010, regulations 2 and 4).

How do I work out the APR from the monthly payment?

Choose 'The monthly payment' and enter it without any optional insurance. There is no direct formula: the rate is found by trial and improvement. In a spreadsheet, =RATE(60,-148.16,7205) gives the monthly rate of the example above, and (1 + that rate)^12 − 1 the APR.

Why might my result differ slightly from the lender's APR?

The calculator assumes equal payments, the first one month after you receive the money. If the first payment is earlier or later, or the last one is adjusted by a few pence, the APR can move by a tenth of a percentage point. A bigger gap usually means a fee is missing, or the fee was added to the loan rather than paid upfront.

Who sets the APR rules in the UK?

The Consumer Credit Act 1974 defines the total charge for credit by reference to rules made by the Financial Conduct Authority (Regulated Activities Order 2001, articles 60L and 60M). Those rules replaced the Consumer Credit (Total Charge for Credit) Regulations 2010 on 1 April 2014. This calculator uses the equation of the 2010 Regulations: a year of 12 equal months, and a result expressed to at least one decimal place.

Sources

  1. legislation.gov.uk: Consumer Credit Act 1974, section 20 (total charge for credit), extent UK (1 April 2014)
  2. legislation.gov.uk: Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, article 60L (definitions) (24 March 2015)
  3. legislation.gov.uk: Regulated Activities Order 2001, article 60M (FCA rules on the total charge for credit) (26 July 2013)
  4. legislation.gov.uk: Consumer Credit (Total Charge for Credit) Regulations 2010, regulations 2, 3 and 4 (costs included, loans secured on land excluded) (28 March 2010)
  5. legislation.gov.uk: Consumer Credit (Total Charge for Credit) Regulations 2010, Schedule (APR equation, equal months and rounding), as in force before 1 April 2014 (26 July 2013)

This calculator gives general information, not legal, financial, tax or accounting advice. The APR a lender is bound by is the one in its quote or credit agreement: check it with the lender or an adviser.

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