1. What is APR?

APR (Annual Percentage Rate) represents the yearly cost of borrowing money, including interest and fees. It provides a standardized way to compare credit card offers and loan products.

2. How Does the Calculator Work?

The calculator uses the APR equation:

Where:

• \( I \) — Total interest paid (Rs)
• \( F \) — Fees (Rs)
• \( P \) — Principal amount (Rs)
• \( T \) — Loan term (years)
• \( APR \) — Annual percentage rate (%)

Explanation: The equation calculates the annualized cost of credit by combining interest and fees, then expressing it as a percentage of the principal amount.

3. Importance of APR Calculation

Details: Understanding APR helps consumers compare different credit card offers and understand the true cost of borrowing. Lower APRs generally mean cheaper credit.

4. Using the Calculator

Tips: Enter all amounts in Rs and term in years. Ensure principal amount and term are greater than zero for accurate calculations.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between APR and interest rate?
A: APR includes both interest rate and fees, giving a more complete picture of borrowing costs.

Q2: What is a good APR for credit cards?
A: As of 2023, average credit card APRs range from 15-25%. Rates below 15% are considered good.

Q3: Does APR include all fees?
A: APR includes most fees but may exclude penalties like late payment fees or returned check fees.

Q4: How does credit score affect APR?
A: Higher credit scores typically qualify for lower APRs, while lower scores result in higher APRs.

Q5: Can APR change after getting a credit card?
A: Yes, variable APR cards can change with the prime rate. Some cards may also change rates based on payment history.