1. What is the APR Formula?

The APR (Annual Percentage Rate) formula calculates the yearly cost of credit as a percentage. It includes interest and fees to give a complete picture of borrowing costs, making it easier to compare different credit 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 in years

Explanation: The formula combines all credit costs (interest + fees), divides by the principal to get a rate, then annualizes it by multiplying by 12/T (months to years conversion).

3. Importance of APR Calculation

Details: APR is crucial for comparing credit card offers and loan products. It provides a standardized way to evaluate the true cost of borrowing, including both interest and fees.

4. Using the Calculator

Tips: Enter all values in Rs (Indian Rupees). The loan term can be in decimal years (e.g., 0.5 for 6 months). All values must be positive numbers.

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's a good APR for credit cards?
A: Rates vary, but generally under 15% is good for India. Lower is better, with the best rates around 10-12%.

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

Q4: Why is APR important for credit cards?
A: It helps compare cards and understand the true cost of carrying a balance.

Q5: How can I lower my credit card APR?
A: Improve your credit score, negotiate with your issuer, or transfer balances to lower-rate cards.