1. What is APR?

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

2. How Does the Calculator Work?

The calculator uses the APR formula:

Where:

• \( I \) — Total interest paid (Rs)
• \( F \) — Fees (Rs)
• \( P \) — Principal amount (Rs)
• \( T \) — Loan term (years)

Explanation: The equation calculates the annualized cost of borrowing as a percentage of the principal amount.

3. Importance of APR Calculation

Details: APR helps consumers compare different credit offers on equal terms, revealing the true cost of credit cards and loans.

4. Using the Calculator

Tips: Enter all amounts in Rs and term in years. Include all fees charged by the lender for accurate results.

5. Frequently Asked Questions (FAQ)

Q1: How is APR different from 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 APRs range from 15-25%. Below 15% is considered good, while above 25% is high.

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

Q4: Why does APR matter if I pay my balance monthly?
A: Even if you pay in full, APR helps compare cards for times when you might carry a balance.

Q5: Can APR change after I get a card?
A: Yes, most credit cards have variable APRs that can change with market conditions.