APR Calculator
This calculator converts a nominal annual rate into the effective annual rate and solves the APR once fees are included. Enter your own numbers — the defaults are examples, not a quote.
How this calculator works
The nominal rate is the advertised annual rate. The effective annual rate (EAR) shows what that nominal rate costs when interest compounds monthly, and the APR including fees shows the cost once upfront charges are counted.
Formula: with r = annualRatePct ÷ 100 ÷ 12, the effective annual rate is ((1 + r)^12 − 1) × 100. For the APR including fees, the calculator finds the monthly rate at which the present value of the payment stream equals the amount actually received (the principal minus upfront fees). It solves that by bisection between 0% and 200%.
The EAR is always a little higher than the nominal rate because interest compounds twelve times a year. A 12% nominal rate, for example, has an EAR of about 12.68%. The gap grows as the rate rises.
The APR including fees matters because fees reduce the amount you actually receive while you repay the full principal. A $300 fee on a $10,000 loan is a 3% cost before any interest, so the true annual cost is higher than the nominal rate suggests.
In Canada, the cost of borrowing and the APR must be disclosed before you sign. Use those official figures as the final check, and remember that this calculator is an illustration based on the numbers you enter, not a lender's quote.
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Frequently Asked Questions
What is the difference between APR and interest rate?
The interest rate is the cost of the money itself. The APR expresses that cost on an annual basis and can include certain fees, so it is usually higher.
What is the effective annual rate?
It is the nominal rate compounded over a year. Monthly compounding makes the EAR slightly higher than the nominal annual rate.
Why does adding fees raise the APR?
Fees reduce the cash you actually receive while you repay the full principal, so the effective cost of the money is higher than the nominal rate.
Is a lower APR always the better loan?
Usually, but also check the term and the total cost of borrowing. A lower APR over a much longer term can still cost more in total.
Last updated: September 16, 2026 · By the Instalment.ca Editorial Team
We research Canadian lending rules and update these pages when the law, the data, or the available offers change. We are not a lender and we do not provide personal financial advice.
Instalment.ca is a loan matching and comparison service, not a lender.
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This is general information, not financial, legal, or tax advice.
Rates and terms vary by lender, creditworthiness, and province. Figures shown are examples only.