Flat rate to APR calculator
Personal and car finance offers often quote a flat rate. This shows what it equals on a reducing balance so you can compare offers fairly.
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How to use it
- Enter flat annual rate and term.
- The result appears straight away and updates as you edit.
- Copy the result, or copy a link that keeps the same values to share it.
How it is calculated
Installment per 1 financed = (1 + flat rate × n ÷ 12) ÷ n. Solve for monthly r so that (1 − (1 + r)^−n) ÷ r = 1 ÷ installment. APR = 12r and effective rate = (1 + r)^12 − 1.
Example
Inputs: Flat annual rate = 5 % a year, Term = 60 months. Result: APR (reducing balance): 9.15%; Effective annual rate: 9.55%; Total charge per 1,000 financed: 250.00.
Limits and caveats
- Assumes equal monthly installments and excludes admin fees.
- The effective rate assumes monthly compounding and is for comparison only.
Questions about this tool
Why is the APR close to double the flat rate?
Over the term the average balance is about half the amount financed, while the flat rate is charged on the full amount.
Does the term change the result?
Yes. The longer the term, the closer the APR gets to double the flat rate. For one month they are equal.
APR vs effective annual rate?
The APR is the monthly rate × 12; the effective rate adds monthly compounding, so it is slightly higher.