How To Calculate APR For Loan?
APR Calculation is Important and this is How You Should Do It APR is Annual Percentage Rate. While most borrowers are aware of interest rate, many do not realize the importance of APR. It is the percentage rate that you will have to pay to the lender along with the interest. As APR is an expense, it is as important as the interest on the loan and that is why you should always calculate the APR before taking a loan. What does APR include? APR consists of different charges and fees associated with the loan. Some of the most common charges are closing costs and processing fee. As every lender has different charges/fees included in the APR, you should check with your lender and confirm what all is included in it. Calculate APR manually: It is a bit complex so you will need a calculator for it. • Add the origination fee (loan processing cost charged by the lender) and interest • Divide the sum with the loan amount • Divide the result with the number of days