Installment APR Calculator
True APR of installments and loansRuns locally · nothing uploaded
The true APR is about 1.79× the advertised rate
Why is the true rate higher? A flat fee is charged on the full amount every month, even though you repay part of the principal each month. The IRR prices the fee against the balance you actually still owe, which is how lenders state APR.
| # | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| 1 | 280 | 226.36 | 53.64 | 2,773.64 |
| 2 | 280 | 230.4 | 49.6 | 2,543.24 |
| 3 | 280 | 234.52 | 45.48 | 2,308.71 |
| 4 | 280 | 238.72 | 41.28 | 2,070 |
| 5 | 280 | 242.99 | 37.01 | 1,827.01 |
| 6 | 280 | 247.33 | 32.67 | 1,579.68 |
| 7 | 280 | 251.75 | 28.25 | 1,327.92 |
| 8 | 280 | 256.26 | 23.74 | 1,071.67 |
| 9 | 280 | 260.84 | 19.16 | 810.83 |
| 10 | 280 | 265.5 | 14.5 | 545.33 |
| 11 | 280 | 270.25 | 9.75 | 275.08 |
| 12 | 280 | 275.08 | 4.92 | 0 |
Results are estimates for reference only and are not financial, lending or tax advice. Confirm actual rates and taxes with your lender or tax authority.
Assumes one on-time payment per month. Add any other fees to the payments, or subtract upfront fees from the amount received, before calculating.
How it works
When to use it
- Convert a card installment plan's flat monthly fee into a true APR to compare with other loans.
- Work out the real rate of a buy-now-pay-later plan or personal loan from the amount received and the monthly payment.
Formula
Amount received = Σ payment_k ÷ (1 + r)^k, k = 1…nr is the monthly internal rate of return (IRR), solved by bisection.
APR = r × 12Effective annual rate = (1 + r)^12 − 1Worked example
Given: 3,000 over 12 months with a 1% flat monthly fee charged each month
- Payment = 3,000 ÷ 12 + 3,000 × 1% = 250 + 30 = 280.
- Solve 3,000 = Σ 280 ÷ (1 + r)^k for k = 1…12: r ≈ 1.788%.
- APR = 1.788% × 12 ≈ 21.46%.
Result: The advertised 12% a year is really about 21.46% APR, roughly 1.79×.
Limitations
- Assumes one on-time payment a month and no late fees.
- Include any other fees in the payments or subtract them from the amount received.
How to use
- 1Choose flat fee rate or known payment.
- 2Enter the amount, term and fee (or payment).
- 3Read the true APR and the schedule.
FAQ
What APR is a 1% monthly flat fee over 12 months?
About 21.5% APR, roughly 1.8× the advertised 12% a year, because the fee is charged on the full amount while you repay principal every month.
What is the difference between APR and the effective rate?
APR here is the monthly IRR × 12. The effective annual rate compounds it: (1 + monthly IRR)^12 − 1.