Calculates the APR of a loan, such as a mortgage, including additional fees or points rolled into the amount borrowed. Advanced APR Calculator.
Total Financial Charges = Total Interest + Total Financing Fees
Amount Financed = Total Loan - Finance Charges;
Total Loan = Loan Amount + Finance Charges
Financial Charges is the sum of all extra costs involved in the loan, which could include points, fees, closing costs, processing fee, etc. It's the money you borrowed that you never got.
Calculations require 3 of the following terms to find the 4th: Loan Amount, Interest Rate, Term and Monthly Payment. We calculate 1. the Monthly Payment based on the actual loan amount then 2. back calculate to a new interest rate (APR) as if this payment was made on just the amount financed.
The annual rate that is charged for a loan, representing the actual yearly cost of a loan. This includes "finacing charges" and any fees or additional costs associated with the loan such as closing costs or points. Although, some fees are not considered "finacing charges". Check with your lending institution.
If you take a mortgage for $100,000 at an interest rate i with no additional fees then i is likely your APR. However, if you have additional fees rolled into the loan, your APR will be higher than the stated interest rate i.
Suppose you lend me $20 for a year at 10% interest. At the end of the year I will owe you 20 + (20 x 10%) = 20 + 2 = $22. Now, 2/20 = 0.10 or the APR is 10%. This is a one year loan at a rate of 10% and an APR of 10%.
Now suppose you lend me $20 for a year at 10% but you are also charging me a $2 fee for all the paperwork. And, I can pay you the fee at the end of the year. At the end of the year I will owe you 20 + (20 x 10%) + 2 = 20 + 2 + 2 = $24. Now, 4/20 = 0.20 or the APR is 20%. This is a one year loan at a rate of 10% and an APR of 20%.