What is APR and how is it different from the interest rate?

The interest rate is the cost of borrowing the principal. APR (Annual Percentage Rate) includes the interest rate plus any fees charged by the lender — origination fees, closing costs, broker fees, etc. APR is always equal to or higher than the interest rate and represents the true annual cost of the loan.

How does the US calculate APR vs the EU?

The US uses APR as defined by the Truth in Lending Act (TILA/Regulation Z). The EU Consumer Credit Directive mandates an APRC (Annual Percentage Rate of Charge), which is nearly identical. Both include fees in the calculation. A key difference: the EU APRC assumes a 1-year horizon for variable rates, while US APR can use different assumptions.

What fees are included in APR?

APR includes: origination fees, discount points, broker fees, mortgage insurance (PMI), and closing costs paid to the lender. It generally excludes: title insurance, appraisal fees, attorney fees (in the US). Always ask lenders for a Loan Estimate (US) or ESIS (EU/UK) document which shows APR with all fees.

APR Calculator — True Annual Percentage Rate Including Fees (US, EU, UK)

APR Calculator

Your stated interest rate isn't the full picture. APR includes fees, revealing the true cost of borrowing. US law (TILA) and the EU directive both require APR disclosure — but they calculate it slightly differently.

💡 APR (Annual Percentage Rate) includes interest plus fees, giving the true cost of borrowing. US law (TILA) and EU directive require lenders to disclose APR.

Loan Amount ($)

Interest Rate (% p.a.)

Loan Term (Years)

Origination Fee (% of loan)

Other Upfront Fees ($)

Quick Answer

A $20,000 loan at 6.5% with a 1% origination fee ($200) has a true APR of approximately 6.85%. That 0.35% difference costs you around $70 more per year — always compare APR, not just the rate.

APR Disclosure Requirements by Country

Region	Regulation	Term Used	Key Requirement
🇺🇸 United States	Truth in Lending Act (TILA)	APR	Must disclose APR on all consumer credit
🇬🇧 United Kingdom	Consumer Credit Act / FCA	APR	Must show representative APR in ads
🇪🇺 European Union	Consumer Credit Directive 2023	APRC	Annual Percentage Rate of Charge (similar to APR)
🇦🇺 Australia	National Consumer Credit Protection	Comparison Rate	Rate including fees over 25yr/$150k benchmark loan
🇨🇦 Canada	Cost of Borrowing Regulations	APR	Must disclose cost of borrowing including fees

APR Calculator

Quick Answer

APR Disclosure Requirements by Country

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