True Annual Percentage Rate Calculator

What is the True Annual Percentage Rate Calculator?

The True Annual Percentage Rate Calculator calculates the total cost of a loan as an annual percentage rate. The nominal interest rate does not tell the whole truth, as opening fees and monthly payments increase the actual cost of the loan. The true annual percentage rate is the figure that allows for loan comparisons.

The calculator is free, works in your browser without registration, and shows the result immediately when you change the values. The calculation is done on your own device, and the information you enter is not sent anywhere.

Formula and Calculation Principle

The true annual percentage rate is the interest rate at which the present value of the loan payments equals the amount borrowed after the opening fee. The calculator solves this by iterating and converting the monthly interest rate into an annual rate.

Practical Example

A $5,000 loan, 12 percent nominal interest rate, 36 months, and a $4.50 monthly payment: the true annual percentage rate is clearly higher than the nominal rate. With default settings, the calculator gives the result: True Annual Percentage Rate 14.79%.

Who is the Calculator Suitable For?

For anyone comparing consumer loans, installment payments, or payday loans.

Tips and Considerations

• Always compare loans based on the true annual percentage rate.
• Ask about all fees and costs before taking out a loan.
• Avoid expensive payday loans; alternatives include bank loans and credit lines.