APR Calculator
Calculate the true annual percentage rate (APR) of a loan, factoring in processing fees on top of the nominal interest rate.
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Your result
10.65%
True APR
AI explanation
Formula
APR is the rate that discounts the EMI stream to the amount actually received (principal − fees), solved via bisectionWorked example
₹10L loan, 10%, 5 years, ₹15,000 fee
| Field | Value |
|---|---|
| Loan amount | 1000000 |
| Nominal interest rate | 10 |
| Tenure | 60 |
| Processing/other upfront fees | 15000 |
| Monthly EMI | 21247.04 |
| True APR | 10.65 |
Assumptions
- The EMI itself is computed on the full nominal principal at the nominal rate — only the amount you actually receive upfront is reduced by fees.
- Excludes any recurring fees (e.g. annual maintenance charges) beyond the one-time upfront fee entered.
- Informational only.
Frequently asked questions
What is APR and how is it different from the interest rate?
APR (Annual Percentage Rate) includes the effect of upfront fees on top of the stated interest rate, showing the true annualized cost of borrowing — it's always equal to or higher than the nominal rate when fees are involved.
Why does a loan with fees have a higher APR than its stated rate?
You pay EMIs calculated on the full loan amount, but you only receive the loan amount minus fees upfront — so your effective borrowing cost, and therefore APR, is higher than the nominal rate.
Should I compare loans using rate or APR?
APR gives a fairer comparison between loan offers with different fee structures, since two loans with the same nominal rate can have very different true costs depending on their fees.
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Sources
- Master Circular on customer service and fair practices code — Reserve Bank of India. Effective 01-07-2015, reviewed 13-09-2026.
This calculator provides a general estimate only and does not constitute financial advice.
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