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Add-On Rate to APR Lookup Table

See what effective APR each add-on rate from 1% to 15% works out to, broken down by repayment term. A free tool that makes the gap between an add-on loan's headline rate and its real cost instantly clear.

Input

With the "add-on" method, interest is calculated up front on the original principal, added to the balance, and the total is split into equal installments. Because the amount the interest is based on never goes down as you repay, the true rate (effective APR) ends up higher than the stated add-on rate. The table below shows what effective APR each add-on rate corresponds to.

Repayment period (years)

Result

Add-on rate to effective APR for a 3-year term (36 monthly payments)

Add-on rate (annual)Effective APR
1.00%1.93%
1.50%2.88%
2.00%3.82%
2.50%4.76%
3.00%5.68%
3.50%6.60%
4.00%7.51%
4.50%8.41%
5.00%9.31%
5.50%10.20%
6.00%11.08%
6.50%11.96%
7.00%12.83%
7.50%13.69%
8.00%14.55%
8.50%15.40%
9.00%16.24%
9.50%17.08%
10.00%17.92%
10.50%18.75%
11.00%19.57%
11.50%20.39%
12.00%21.20%
12.50%22.01%
13.00%22.81%
13.50%23.61%
14.00%24.40%
14.50%25.19%
15.00%25.98%

For example, an add-on rate of 10.00% works out to an effective APR of about 17.92% over a 3-year term.

How it works

  • The "add-on" method calculates interest up front on the original principal, adds it to the balance, and splits the total into equal monthly payments. Because the figure the interest is based on does not change as the balance falls, the real rate ends up higher than the stated add-on rate.
  • This table sets the number of payments to n = repayment period (years) x 12 and uses a principal of 100. The total repayment is 100 x (1 + add-on rate x years), and the monthly payment is that total divided evenly across the n payments.
  • Assuming monthly repayment on a declining balance, the monthly rate i is back-solved by bisection so that the present-value annuity equation 100 = monthly payment x (1 - (1 + monthly rate)^(-n)) / monthly rate holds. The effective APR is then APR = i x 12 x 100 (%).
  • The table lists add-on rates from 1% to 15% in 0.5% steps, one per row, with the matching effective APR alongside. Switching the repayment period changes n and recalculates every APR.
  • As a rule of thumb, the effective APR of an add-on rate is roughly a little under twice the add-on rate (for example, a 10% add-on rate over 3 years works out to an effective APR of around 18%). Don't be fooled by a low headline rate; compare on real cost.
  • Note: this tool is an estimate based on a simplified add-on method (equal principal split with interest taken up front) and does not account for bonus payments, fees, rounding, or guarantee charges. Actual contract terms may differ, so make your final decision at your own discretion.