Formula used
The interactive calculator computes EMI on the sanctioned amount, subtracts attributable upfront charges and advance EMIs to find net cash received, then solves the monthly internal rate of return of the remaining repayment cash flows and annualises it. The data-formula output also includes a clearly labelled approximation for validation and non-interactive contexts. Compare the result with the APR in the lender's Key Facts Statement.
Example calculation
A Rs 5 lakh loan quoted at 12% for 36 months has an EMI based on Rs 5 lakh. If fees, GST and insurance reduce the cash actually received, effective APR is higher than the quoted rate.
How to use this calculator
- Enter the sanctioned amount, quoted reducing rate and tenure.
- Add processing fee, GST, insurance and other attributable upfront charges.
- Enter advance EMIs only if collected at disbursal.
- Compare quoted rate, net cash, total borrowing cost and effective APR.
- Check every input against the lender's Key Facts Statement.
Important assumptions
- EMIs are monthly and evenly spaced after disbursal.
- Advance EMIs reduce net cash and the number of later instalments in the interactive model.
- Processing fee GST is applied only to the processing fee input.
- Broken-period interest, late fees and optional future charges are excluded.
Common mistakes to avoid
- Comparing loans only by EMI or advertised interest rate.
- Ignoring GST and compulsory insurance deducted before disbursal.
- Counting optional products as unavoidable without asking the lender.
- Using flat-rate interest as if it were a reducing-balance rate.