Personal loan involves a lot of intricacies such as calculation of personal loan interest rates, EMIs, tenure of the loan, etc. Therefore, you may often face doubts and dilemmas regarding various aspects of a loan. One such aspect that you may be wondering is how is APR different from interest rates? Well, let’s have a look

APR vs. Personal Loan Rate

The personal loan rate is the cost that will be levied by the lender on you as cost of the loan. An important point that you should consider is that the personal loan interest rate is just the interest rate that will be charged. It will not include other fee such as processing fee, documentation fee, foreclosure fee (if any), etc.

APR stands for Annual Percentage Rate, it provides better insights into the amount that you will be required to pay to the lender. It is the total price that you will owe to the lender including interest rate, and any other type of fee that is charged by the lender.

Another aspect that you many wonder about is why APR is higher than interest rate. Well, the reason for that is that the personal loan rate is charged on just the principal amount i.e. the amount you borrow while APR will provide you with the complete cost of borrowing money from a lender. Therefore, APR is generally higher than personal loan interest rate.



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