The interest rate is only part of what a loan costs. Add the processing fee and other charges to see the APR, the true yearly cost of your loan, before you sign.
The amount sanctioned, before any fees are deducted.
The yearly rate on your offer.
Interest charged on reducing balance.
GST is charged on processing fee.
Leave out late-payment and foreclosure charges, which APR does not include.
The APR in your lender's Key Facts Statement is the figure that applies to your loan.
These tools use the numbers you entered above.
A lower interest rate doesn't always mean a cheaper loan. Compare two offers for the same amount (₹1,00,000) and tenure (12 months) to see which really costs less.
| Comparison Item | Offer A | Offer B |
|---|---|---|
| APR | 22.97% | 19.14% |
| Monthly EMI | ₹9,073 | ₹9,168 |
| Amount you receive | ₹96,460 | ₹99,410 |
| Total cost (Interest + Fees) | ₹12,417 | ₹10,606 |
APR, or annual percentage rate, is the yearly cost of a loan including the interest rate and the other charges you pay to get it, such as the processing fee. RBI defines it as the annual cost of credit to the borrower, covering the interest rate and all other charges linked to the loan.
Two loans with the same interest rate can have very different APRs if their fees differ. That makes APR the fairer number for comparing offers.
Add the loan amount, interest rate and tenure from your offer. Switch to Flat if quoted as flat rate.
Enter the processing fee, keep GST on (unless fee is tax-inclusive), and add any other charges.
Compare APR with interest rate. The gap shows how much fees add to your yearly cost.
Use the tabs to compare two offers or check your lender's Key Facts Statement (KFS).
RBI asks lenders to calculate APR on the amount you actually receive (net disbursed amount), using the internal rate of return (IRR) on reducing balance. The calculator finds monthly rate r where: Net Disbursed = ∑ [ EMI ÷ (1 + r)ᵗ ] for t=1..n APR = r × 12 × 100 Because fees reduce net cash received upfront while EMIs repay the sanctioned principal + interest, APR is always higher than the stated interest rate.
RBI mandates clear classification of charges in your Key Facts Statement (KFS).
Contingent charges are still disclosed separately in your KFS under the summary table of charges.
Understanding the forces that widen the gap between your interest rate and APR.
Every rupee deducted upfront raises the APR. A 1% fee instead of 2% brings the APR down from 22.63% to 20.29%.
The same fee weighs more on a short loan. 6 months gives an APR of 26.47% vs 20.48% for 24 months.
Insurance, documentation or stamp charges collected with the loan count in APR and inflate it.
A flat rate sounds low but charges interest on principal already repaid. Always compute reducing APR.
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