Installment APR Calculator
Find the real annual interest rate hidden in monthly fees and installment plans
How this calculator works
Installment plans advertise a small monthly fee, but you repay principal every month while the fee keeps being charged on the original amount. That is why a 0.6% monthly fee is not 7.2% a year: over 12 months it works out to about 13.8% compounded.
Enter the amount, the number of months and the fee rate. The calculator finds the rate at which the present value of your payments equals the money you actually received (the internal rate of return), and shows it as both a nominal and a compounded annual rate.
When comparing offers, compare annual rates only, and ask lenders for the compounded figure. A simple-interest quote will always look lower.