**What is an Annual Percentage Rate (APR)?**

An annual percentage rate is the annual interest rate charged for financing or earning through an investment and this rate of interest is intimated as the percentage, which represents the annual cost of funds over the loan term. It is the number that represents the cost of borrowing on the principal amount. If the borrower who wants to pay off the loan in less time, APR will help to determine the impact of the reliable costs. All these costs are very low when spread over the 30 years loan term than repaying the loan in 10 within years.

There are different APR’s based on how the consumer uses their credit card. While selecting the credit card, it is a good idea to acknowledge these rates in addition to the credit card:

**Purchase APR:**The purchasing cost of the credit card.**Cash advance APR:**The cash borrowed from the credit card can be higher in the cost. There are different formats for APR checks for certain types of advance cash and there is no grace period for that.**Penalty APR:**The extra APR charges can be applied to the particular balance. When the customer violates the card term and conditions like failed to make payment on time.**Introductory APR:**It is also known as a promotional APR. It is the special feature that lowers APR for the limited period of time. It also applied to the specific transactions, balance transfers, cash advances or any combinations.

The following are the generalized list of common fees
that are included in the mortgage APR’s. As they are different for different
lender these are the generalized fee list.

- Administration fee.
- Application fee.
- Mortgage insurance.
- Mortgage broker fee.
- Audit fee.
- Broker fee.
- Closing fee.
- Courier fee.
- Escrow fee.
- HOA review or transfer fee.
- Origination points.
- Discount points.
- PMI.
- Processing fee.
- Refinance fee.
- Underwriting fee.

**Fees usually exempted from the APR are:**

- Appraisal fee.
- Builder Warranty.
- Pre-paid items on escrow balances, like taxes or insurance.
- Intangible tax.
- Title inspection.

**Fixed APR:**

A fixed-rate APR does not fluctuate with changes to an index. That doesn’t mean the interest rate remains the same, the lender or bank will notify the customers before the change occurs. The loans with Fixed APRs consist rates that are guaranteed not to change during the total time period of the loan.

**Variable APR:**

A variable APR will change with the index rate of interest, like the prime rate published on the wall street journal. In the cardholder agreement, the detailed information about the card’s APR change over the time is explained.

**APR vs. APY:**

APR is the annual rate of interest that is paid on an investment mostly associated to deposit account. Alternatively, APY is an interest rate that reflects the total amount of interest paid on an account, it is based on the given interest and the frequency of compounding in a year. This seemingly subtle difference can have important implications for investors and borrowers.

## The formula for calculating the APR

# Ø For the rate of effective APR

(1+
r/n) ^{n} –1

- For the actual amount of interest paid

Principal * ((1+r/n) ^{n} –1)

**The components included in the APR calculator are: **

They are two types of calculators:

- General APR calculator:
- Loan amount.

- Loan term.

- Interest rate.

- Compound.

- Payback.

- Loaned fees.

- Upfront fee.

- Mortgage APR calculator:
- House value.
- Down payment.
- Loan term.
- Interest rate.
- Loan fees
- Points
- PMI insurance.

By using this calculator you can estimate the annual rate percentage easy. They are two calculators in this annual rate percentage one for general APR calculator and the other one is the mortgage APR calculator.