APR Calculator
The rate a lender quotes usually ignores fees. APR folds the fees in, showing the true yearly cost of the money you actually receive.
Results
APR
11.099%
- Quoted rate
- 10%
- Effective annual rate
- 11.681%
- Monthly EMI
- ₹21,247.04
- Total fees
- ₹25,000
- Total cost of borrowing
- ₹2,99,823
Once ₹25,000.00 of fees are included, a loan quoted at 10% has an APR of 11.099%.
Show the calculation steps
- EMI on ₹10,00,000.00 at 10% for 60 months = ₹21,247.04.
- Fees = 2% of the loan + ₹5,000.00 other = ₹25,000.00, so you actually receive ₹9,75,000.00.
- Find the monthly rate i where the present value of 60 payments of ₹21,247.04 equals ₹9,75,000.00: i = 0.92492%.
- APR = i × 12 = 11.099%; effective annual rate = (1 + i)^12 − 1 = 11.681%.
- APR is defined slightly differently in different countries (some quote the compounded effective rate). Both figures are shown.
Why APR is higher than the quoted rate
Fees are paid upfront, so you receive less than the loan amount yet still repay interest on all of it. The APR is the interest rate that reconciles what you got with what you pay back.
Using APR to compare loans
A loan with a lower quoted rate but higher fees can have a higher APR than one with a higher rate and no fees. Comparing APRs puts offers on the same footing, provided they have the same tenure.
Formula
Money received = loan − fees
Find monthly rate i such that EMI × (1 − (1 + i)^−n) ÷ i = money received
APR = i × 12 · Effective annual rate = (1 + i)^12 − 1
Where:
- EMI
- = Payment based on the quoted rate and the full loan amount
- i
- = Monthly rate implied by the payments and the money you receive
- n
- = Number of monthly payments
Example calculation
₹10 lakh at 10% for 5 years with 2% processing fee and ₹5,000 other fees
Inputs
- Loan Amount
- ₹10,00,000
- Quoted Interest Rate
- 10 %
- Loan Tenure
- 5 years
- Processing Fee
- 2 %
- Other Fees
- ₹5,000
Result
- APR
- 11.099%
- Quoted rate
- 10%
- Effective annual rate
- 11.681%
- Monthly EMI
- ₹21,247.04
- Total fees
- ₹25,000
- Total cost of borrowing
- ₹2,99,823
Step-by-step
- EMI on ₹10,00,000.00 at 10% for 60 months = ₹21,247.04.
- Fees = 2% of the loan + ₹5,000.00 other = ₹25,000.00, so you actually receive ₹9,75,000.00.
- Find the monthly rate i where the present value of 60 payments of ₹21,247.04 equals ₹9,75,000.00: i = 0.92492%.
- APR = i × 12 = 11.099%; effective annual rate = (1 + i)^12 − 1 = 11.681%.
Important notes
- Rules for calculating APR differ by country. Here APR is the nominal annual rate (monthly rate × 12) and the compounded effective rate is shown too.
Disclaimer: This calculator provides estimates for informational purposes and should not be considered financial advice. Actual figures from lenders, banks and investment products can differ because of fees, taxes, rounding rules and changing rates. Consult a qualified professional before making financial decisions.
Frequently asked questions
What is APR?
The annual percentage rate is the yearly cost of a loan including fees, expressed as a percentage.
What is the difference between APR and the interest rate?
The interest rate is only the price of the borrowed money. APR also includes fees, so it is higher when fees exist.
Does a longer tenure lower the APR?
Upfront fees are spread over more months, which lowers their effect on APR per year, but total interest rises.
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