# Basic APR Calculator

Contents

### Basic APR Calculator

The Basic APR Calculator is designed to help you calculate the Annual Percentage Rate (APR) of a loan, including the effects of interest rates and any additional financing fees. This calculator is especially useful for understanding the true cost of a loan, including all associated charges.

#### Key Features

• Loan Amount: The principal amount borrowed.
• Interest Rate: The annual interest rate on the loan.
• Term in Months: The duration of the loan in months.
• Financing Fees: Any additional fees that are added to the loan amount.

### How to Use the Basic APR Calculator

1. Loan Amount: This is the amount of money you borrow. For example, if you borrow $2,000, enter “2000” in the Loan Amount field. 2. Interest Rate: Enter the annual interest rate for the loan as a percentage. For example, if the interest rate is 10%, enter “10” in the Interest Rate field. 3. Term in Months: Enter the number of months over which you will repay the loan. For example, if the loan term is 10 months, enter “10” in the Term in Months field. 4. Financing Fees: Enter any additional fees that are added to the loan. These fees increase the total loan principal but are not included in the interest calculation. For example, if there are$30 in financing fees, enter “30” in the Financing Fees field.

### Formula and Calculations

• Monthly Payment (PMT): This is calculated using the formula:

$PMT = \frac{LoanAmountWithFees \times r}{1 – (1 + r)^{-n}}$

where

$r$

is the monthly interest rate, and

$n$

is the number of months.

• Total Payments: The total amount you will pay over the term of the loan, including interest and financing fees.

• Total Interest: The amount of interest paid over the life of the loan, excluding financing fees.

• Total Financing Charges: This includes the total interest plus the financing fees.

• Total Loan Principal: The original loan amount plus any financing fees.

• APR: The Annual Percentage Rate, calculated iteratively using a binary search method to match the payment amount with the calculated monthly payment.

### Example Calculation

Let’s say you have the following inputs:

• Loan Amount: $2,000 • Interest Rate: 10% • Term in Months: 10 months • Financing Fees:$30

Steps:

1. Enter “2000” for the Loan Amount.
2. Enter “10” for the Interest Rate.
3. Enter “10” for the Term in Months.
4. Enter “30” for the Financing Fees.

Expected Results:

• APR: 13.3283%
• Original Loan Amount: $2,000.00 • Interest:$94.20
• Financing Fees: $30.00 • Total Financing Charges:$124.20
• Total Loan Principal: $2,030.00 • Total Payments:$2,124.20
• Monthly Payment: \$212.42