Results:
Monthly Payment:
Total Interest Paid:
Concepts
Annual percentage rate (APR) is the cost of borrowing money over a period of time, expressed as a percentage. It includes the interest rate plus any additional fees or charges associated with the loan.
Formulae
The following formula is used to calculate APR:
APR = (Interest + Fees) / Principal * (1 / Time) * 100
Where:
- APR is the annual percentage rate
- Interest is the total interest paid on the loan
- Fees are any additional fees or charges associated with the loan
- Principal is the amount of money borrowed
- Time is the length of the loan in years
Benefits
There are a number of benefits to using a basic APR calculator:
- Helps you compare loans: An APR calculator can help you compare loans from different lenders. This can help you find the best loan for your needs and budget.
- Helps you understand the true cost of a loan: An APR calculator can help you understand the true cost of a loan, including the interest rate and any additional fees or charges. This can help you make an informed decision about whether or not to take out a loan.
- Helps you save money: An APR calculator can help you save money by helping you find the loan with the lowest APR.
Interesting facts
- APR is required to be disclosed by lenders on all consumer loans.
- APR is calculated using a standardized formula, so it is easy to compare APRs from different lenders.
- APR can vary depending on a number of factors, such as the type of loan, the borrower’s credit score, and the amount of money being borrowed.
Scholarly references
- The Truth in Lending Act: A Comprehensive Guide to Consumer Credit Laws by Michael B. Lacroix and Joseph G. Winer (2016)
- Consumer Finance: An Introduction by Philip L. Swan and James G. Ang (2018)
- Personal Finance: The Complete Guide by William G. Nickels, Susan J. Nickels, Bruce R. Miller, and Stephen J. Arnold (2020)
Examples
The following table shows some examples of APR calculations:
| Loan type | Principal | Interest | Fees | Time (years) | APR |
|---|---|---|---|---|---|
| Personal loan | $10,000 | $1,000 | $200 | 5 | 12.4% |
| Auto loan | $20,000 | $2,000 | $300 | 3 | 10.3% |
| Mortgage | $300,000 | $30,000 | $5,000 | 30 | 4.5% |
Applications
Basic APR calculators can be used by anyone who is considering taking out a loan. This includes students, borrowers, and small businesses.
Conclusion
Basic APR calculators are a valuable tool that can help you compare loans, understand the true cost of a loan, and save money. If you are considering taking out a loan, be sure to use a basic APR calculator to help you make an informed decision.
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Sandeep Bhandari is the founder of ExactlyHowLong.com website.
I am a professional full-time blogger, a digital marketer, and a trainer. I love anything related to the Web and I try to learn new technologies every day.
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