See the true annual cost of a loan (APR) once fees and points are included.
6.19%
Monthly payment
$1,199.10
Total cost
$431,676.38
The advertised interest rate on a loan is only part of its true cost. When you borrow money, lenders typically charge upfront fees—origination fees, application fees, discount points—or add them to the loan balance. Those costs are real money you pay, yet they are separate from the stated interest rate. The Annual Percentage Rate (APR) exists to show you the complete picture by rolling the interest rate and fees into a single annualized figure. Two loans with the same headline rate can carry very different APRs if their fee structures differ. This calculator shows how fees and points raise the effective cost of borrowing above the note rate—the key to honest loan comparison. Use this when evaluating mortgage offers, personal loans, or auto loans where fees could vary between lenders.
A $200,000 loan at 6% interest with a 30-year term and zero fees yields a monthly payment of $1,199.10 and an APR of 6%, the same as the stated rate. Nothing has reduced the principal, so the effective cost of borrowing matches the rate you were quoted.
The same $200,000 at 6% over 30 years, but now with $4,000 in fees and points, changes the equation. The monthly payment is still $1,199.10, but you only receive $196,000 (the full loan minus fees). The lender must calculate the rate on that net amount to reach the same payment, which turns out to be about 6.19% APR. That 0.19% increase translates to tens of thousands of dollars more over three decades.
What's the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal, expressed as a yearly percentage. APR wraps the interest rate together with most lender fees and charges into a single annualized number. A 6% rate with zero fees yields 6% APR; the same 6% rate with $4,000 in fees might yield 6.19% APR. APR is the more complete figure for comparison across offers.
Why is my APR higher than my rate?
Fees and points reduce the principal you actually receive. If you borrow $200,000 but pay $4,000 in fees, you pocket only $196,000. To amortize that smaller amount at the same monthly payment, the lender must charge a higher interest rate. That higher rate is reflected in the APR, showing you the true cost.
How do points affect APR?
Discount points are an upfront fee—each point typically costs 1% of the loan amount and buys down the interest rate by 0.25%. If you buy 2 points on a $200,000 loan, you pay $4,000 to reduce the rate from 6.5% to 6%. This calculator shows the APR reflecting both the lower rate and the upfront cost, letting you decide if the monthly savings justify the cash outlay.