APR Calculator

How do I calculate APR using this calculator?

We have designed this calculator to help you understand the overall cost of borrowing. APR, generally known as Annual Percentage Rate is calculated based on the interest rate, loan amount, the term of the loan, and finance charges that are levied on the loan. You can calculate the APR of a loan that you are considering to borrow by entering the following details:

  1. Loan Amount

    Enter the amount that you are planning to borrow from the lender. Always borrow an amount that you can repay easily.

  2. Interest Rate

    You are required to enter the rate of interest charged by the lender.

  3. Loan Term

    Fill in the length of the loan. That means how many years you are planning to borrow a loan.

  4. Finance Charge

    A few lenders may charge you a loan origination fee, and other related charges when you borrow a loan.

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All the lenders who are authorised by the Financial Conduct Authority will display the APR of the loans they are offering. However, an APR calculator can be useful when you are comparing different offers from multiple lenders.

Is there any difference between APR and interest rates?

Yes. There is a difference between an APR and interest rate. An interest rate is charged on the principal amount that you borrow. While an APR takes into consideration the finance charge. Therefore, it can be said that an APR indicates the actual cost of borrowing.

So, while comparing personal loans you should compare the offers that you receive based on their APRs. The lender offering you the lowest APR is likely to offer the best value on the deal that you are about to secure.

APRs significantly impact the monthly repayment amount that you will have to pay each month. Hence, compare multiple offers to find the best one available.

What is a good APR rate?

The lower the APR, the better it is. When you apply for a loan, lenders assess a wide range of factors for setting the APR. The interest rate that you will be charged depends on your credit score, debt-to-income ratio, employment status, loan amount, and the term of the loan.

If you have a good credit score and a low debt-to-income ratio, you are most likely to get a personal loan with a low APR. Therefore, before applying for a personal loan, work on improving your credit score to get a good APR rate.