APR Cost Calculator True Borrowing Cost
Lenders advertise interest rates. APR reveals the real cost including fees and charges.
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Frequently Asked Questions
What's the difference between interest rate and APR?
The interest rate is just the cost of the loan principal. APR (Annual Percentage Rate) includes interest rate PLUS all fees — processing fees, documentation charges, insurance, etc. APR is always higher than the stated rate and gives you the true cost of borrowing for comparison.
What is a flat rate vs reducing balance rate in India?
In flat rate loans, interest is charged on the original principal throughout. In reducing balance loans, interest is charged only on the outstanding balance. A 10% flat rate is equivalent to roughly 18–20% reducing balance APR — significantly more expensive. Always compare on reducing balance or APR basis.
How do processing fees affect APR?
A 1% processing fee on a 2-year loan increases effective APR by roughly 0.5–0.7%. On a 1-year loan, the same fee has nearly double the impact on APR. This is why short-term loans with high processing fees are often far more expensive than they appear.