1. What is APR?

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

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)
• \( APR \) — Annual percentage rate (%)

Explanation: The equation calculates the annualized cost of borrowing by combining interest and fees, then scaling to a yearly rate.

3. Importance of APR Calculation

Details: Understanding APR helps consumers compare credit products and understand the true cost of borrowing. Lower APR generally means lower borrowing costs.

4. Using the Calculator

Tips: Enter all amounts in Rs. Principal and term must be greater than zero. For credit cards, use your average daily balance as principal.

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: Rates vary, but generally under 15% is good. Excellent credit may qualify for rates under 12%.

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

Q4: How does credit card APR work?
A: Credit cards typically have variable APRs that change with the prime rate. Different transactions may have different APRs.

Q5: Can APR be negotiated?
A: Sometimes, especially if you have good credit history. It never hurts to ask your credit card issuer.