How is APR different from the nominal interest rate?

The nominal rate is interest only. APR additionally includes commissions, fees and term — it shows the true yearly cost.

Why can payday loan APRs be hundreds of percent?

Short terms turn even small fees into large annual percentages. Compare total cost, not just APR.

Does the calculator include insurance?

Not by default. If insurance is mandatory, add its monthly cost in the „Monthly fee” field.

Loan APR calculator

APR (Annual Percentage Rate) reflects the true yearly cost of a loan — including interest, commissions and fees. It is the fairest way to compare offers. Enter the parameters for an instant result.

Loan amount (USD)

Repayment term: 24 months

Nominal interest (% per year)Commission (% of amount)Monthly fee (USD)

APR: 16.1%
Monthly installment: $242
Total amount payable: $5,818
Total cost of the loan: $818
Financed principal (with commission): $5,150

How is APR calculated?

We compute the effective annual rate that equates the present value of the disbursed amount with all payments (Newton-Raphson on monthly IRR), then annualise: APR = (1 + r_monthly)^12 − 1. Same methodology as EU directive 2008/48/EC.

FAQ

How is APR different from the nominal interest rate?: The nominal rate is interest only. APR additionally includes commissions, fees and term — it shows the true yearly cost.
Why can payday loan APRs be hundreds of percent?: Short terms turn even small fees into large annual percentages. Compare total cost, not just APR.
Does the calculator include insurance?: Not by default. If insurance is mandatory, add its monthly cost in the „Monthly fee” field.