How to use this calculator
- Enter the loan amount, the quoted annual interest rate and the term.
- Enter the origination fee as a percentage of the loan, plus any other flat fees.
- Choose how often you make payments. Many online lenders collect weekly.
- Compare the effective APR, which includes fees, across loan offers.
Formula
The payment per period uses the amortization formula with the periodic rate (annual rate ÷ payments per year). Fees reduce the money you actually receive, so the effective APR is the rate at which the net proceeds equal the present value of all payments.
Payment = L × i / (1 − (1 + i)^−n), with i = rate ÷ payments per year
Net proceeds = Σ Payment / (1 + APR/k)^t, solved for APR
Example
- $100,000 at 9.5% for 5 years, monthly: payment ≈ $2,100.19.
- A 2% origination fee costs $2,000, so you receive $98,000.
- Solving for the rate that equates $98,000 to 60 payments of $2,100.19 gives an effective APR of about 10.4%.
Frequently asked questions
Why is the APR higher than the interest rate?
Origination and other fees are paid upfront or deducted from the loan, so you pay interest on money you never received. APR spreads those costs over the term.
Are weekly payments cheaper?
At the same annual rate, more frequent payments reduce the balance slightly faster and lower total interest a little. Some lenders quote factor rates instead of interest rates, which can be much more expensive. Convert those offers to an APR before comparing.
Does this include SBA guarantee fees?
Add any SBA guarantee or packaging fees in the other fees field to include them in the effective APR.