Example 1
- Amount: 10,000
- Cost: 1,200
- Term: 12 mo.
Simplified APR is 12.00%. The cost-to-principal ratio is also 12.00%.
At 10,000 with 1,200 cost over 12 months, simplified APR is 12.00% and matches the cost-to-principal ratio.
APR calculator
Enter the loan amount, the total known borrowing cost, and the term in months. The calculator estimates APR, the annual percentage rate, as (1 + cost/amount) to the power 12/months, minus 1. At 10,000, a 1,200 cost, and 12 months you get 12.00%.
Result
Loan amount, Total known borrowing cost, Term (months) and Interest over the term (optional). The result shows up here.
Estimate (1 + cost/amount)^(12/months) − 1. Not IRR and not statutory APR. Cost parts sit under Additional options. All-in from a payment: total cost of loan.
How results are calculated
Amount10,000
Cost1,200
n12
APR12.00%
Simplified APR, the annual percentage rate, on this page is one power: (1 + cost divided by amount) to the power 12 divided by months, minus 1. At 10,000, a 1,200 cost, and 12 months the cost-to-amount ratio is 12% and the APR estimate is also 12.00%. At 20,000, a 3,500 cost, and 24 months you get about 8.40%. The calculator does not solve IRR from a schedule and does not copy a statutory disclosure formula.
People compare two offers with one percent. You enter a cost you already know, or you build it from parts. If you fill Interest over the term, Upfront fee(s), Recurring monthly fee, and Insurance over the term, the calculator sums them into Total known borrowing cost. 1,800 + 600 + 25 times 24 + 300 = 3,300. At 15,000 and 24 months the estimate is about 10.45%, above the 9% nominal rate in that example.
Required fields are Loan amount, Total known borrowing cost, and Term (months) when you enter the cost by hand. Under Additional options the four parts can replace an entered cost. Nominal interest rate % is optional and only shows estimate minus nominal. Monthly all-in on the page is (amount + cost) divided by months. At 10,000 and 1,200 over 12 that is 933.33.
Total cost of loan builds an annuity and adds fees outside the payment. The loan installment page shows 1,112.22 from 50,000 at 12% for 5 years, without this power. This page stays with one annual figure. Do not paste a 1,112 payment into the cost field, or the calculator will treat it as the whole-term cost.
Header currency only labels the amounts. A comma and a period in 8.4 mean the same number. The calculator waits for a positive amount, a non-negative cost, and positive months. This is a teaching estimate, not a statutory APR from an offer.
Enter 10,000, 1,200, and 12, click Calculate, and check 12.00%. Then try 20,000, 3,500, and 24 to see about 8.40%.
Formula
APR estimate = (1 + cost / amount)12 / n − 1
where n is the term in months. The result is shown as a percent. This is a teaching shortcut, not statutory APR from an offer and not IRR from a full schedule.
At 10,000, a 1,200 cost, and n = 12: (1 + 0.12)1 − 1 = 12.00%. At 20,000, a 3,500 cost, and 24 months the exponent is 0.5 and the estimate is about 8.40%.
How to use
- Enter Loan amount, for example 10,000, and Term (months), for example 12.
- Enter Total known borrowing cost, for example 1,200, or build it under Additional options from Interest, Upfront fee(s), Recurring monthly fee, and Insurance.
- Optionally enter Nominal interest rate % to see estimate minus the nominal rate.
- Click Calculate. At 10,000, a 1,200 cost, and 12 months APR is 12.00% and cost/amount is also 12.00%.
- All-in from an annuity payment lives on total cost of loan. This calculator stays with one power.
Simplified APR from cost over principal
Estimate (1 + cost/amount)^(12/months) − 1. At 10000, a 1200 cost, and 12 months, APR is 12.00%. Not statutory APR from an offer.
- APR
- Annual percentage rate in this shortcut. 1200 / 10000 at 12 months = 12.00%. At 20000, 3500, and 24 months the estimate is about 8.40%.
- Nominal
- Optional rate for the gap line. On 15000, 24 months, and 1800+600+25×24+300 the 3300 total cost pushes the estimate above 9%.
- borrowing cost
- The Total known borrowing cost field, the numerator. 1200 on 10000 for a year matches APR 12%. Not LTV and not IRR.
Usage examples
Example 2
- Amount: 20,000
- Cost: 3,500
- 24 mo., nominal 8%
The estimate is about 8.40%. When total cost is mostly interest, the result is often close to the nominal rate.
When total cost is mostly interest, the estimate is often close to the nominal rate — about 8.40% in the example.
Example 3
- 15,000, 24 mo., nominal 9%
- Interest 1,800 + upfront 600
- Fee 25/mo. + insurance 300
Total cost is 3,300. The estimate comes out above the 9% nominal rate.
With a 3,300 total cost from interest, fees, monthly charges, and insurance, the estimate rises above the 9% nominal rate alone.
When NOT to use this calculator
- It does not calculate statutory APR/APRC from bank documents.
- It does not help you choose a precise monthly instalment - use instalment or mortgage calculators instead.
- It does not show a full fee structure, only a simplified annual cost based on what you enter.
If you want to calculate:
- your instalment and total repayment → use Loan instalment or Mortgage instalment,
- full all-in cost including fees → use Total cost of loan.
Related calculators
FAQ
What is an APR calculator on this page?
The calculator estimates simplified APR as (1 + cost/amount) raised to 12/months, minus 1. At 10,000 with 1,200 cost over 12 months the result is 12.00%. An educational model, not a statutory APR disclosure from a lender.
How is simplified APR calculated?
The estimate is (1 + cost / amount) raised to 12 / months, minus 1. At 10,000, a 1,200 cost, and 12 months the result is 12.00%. The calculator does not solve IRR from a schedule.
How do I calculate an APR with this tool?
Enter the loan amount, the total known borrowing cost, and the term in months. The calculator raises (1 + cost/amount) to 12/months and subtracts 1. At 10,000, 1,200, and 12 months that is 12.00%.
What does 12% APR mean on this page?
In the worked example of 10,000 with 1,200 cost over 12 months, simplified APR is 12.00%. That means the known cost annualizes to about 12% of the loan amount under this power formula — not a Regulation Z disclosure.
How do the cost components under Additional options work?
Interest, upfront fees, monthly fee, and insurance sum into total cost and overwrite the entered cost field. Example: 1,800 + 600 + 25 × 24 + 300 = 3,300. At 15,000 and 24 months the estimate is about 10.45%.
Is this statutory APR from a lender offer?
No. There is no full IRR and no statutory disclosure formula. It is a power of cost and amount — a teaching estimate.
Is this a mortgage APR or credit-card APR calculator?
No. It does not price points, prepaid interest, or revolving credit-card cycles. It uses one total cost and one term in months for a simplified power estimate.
Can I enter the term in years?
No. The field is Term (months). One year is 12; two years is 24. Entered 5 would be read as 5 months.
How is this different from total cost of loan?
That page shows an annuity payment and all-in in money. Here you get one percent from a power. The 1,087.12 payment at 50,000, 11%, and 5 years lives on total cost of loan.
Is monthly all-in the annuity payment?
No. It is (amount + cost) / months. At 10,000 and 1,200 over 12 that is 933.33. The 1,112.22 annuity on 50,000 at 12% for 5 years is on the loan installment page.
Does a comma in 8.4 work?
Yes. 8,4 and 8.4 are the same number. Header currency only labels the amounts.
Is the result a credit decision?
No. It is an estimate from the numbers you enter. An offer prints its own APR from its own fees and formula.
Knowledge sources
APR in this calculator is an estimate from the numbers you enter, not a statutory figure from an offer.
Page updated in 2026.