Estimate for a single drawdown and equal monthly instalments, using the simplified APRC method. The actual APRC in your loan agreement may differ.
This calculator works out the real annual cost of any personal loan, regardless of the amount, interest rate, or the fee a bank charges. It lets you compare offers from different banks on a level footing, since APRC accounts for one-off charges as well as the nominal interest rate.
The calculator needs four figures: the loan amount, the nominal interest rate, the arrangement fee, and the number of instalments. We explain each one below.
The loan amount is the sum you actually want to borrow. The nominal rate is the annual figure a bank advertises — usually lower than the real cost of the loan, since it doesn't include extra charges.
This is a one-off charge a bank takes for granting the loan, usually a percentage of the loan amount or a flat fee. The calculator adds it to the amount the instalment is based on, then works out the rate at which the discounted instalments equal the amount actually paid out to the borrower — that rate is the APRC.
This is the repayment term in months — the more instalments, the more the fee is effectively spread out, which usually lowers the APRC slightly compared to a very short term.
A loan of 15,000, nominal rate 9% a year, a 5% fee (750), over a 24-month term. On paper it looks like a 9%-a-year loan — but once the fee is factored in, the real annual cost (APRC) rises to roughly 14%. That's exactly why lenders are legally required to state APRC in every loan advertisement — it's the only figure that lets you compare offers fairly.
There's no closed-form formula for APRC, so the calculator finds it numerically (bisection), testing rates until the discounted instalments match the amount actually disbursed to the borrower. This is a simplified model for a single drawdown with equal monthly instalments, so the APRC in your loan agreement may differ slightly if it includes extra charges such as insurance.
APRC (Annual Percentage Rate of Charge) shows the true annual cost of a loan — it accounts not just for the nominal interest rate but also a one-off arrangement fee. The instalment is calculated on the loan amount plus the fee, and the APRC is the rate at which the discounted instalments equal the amount actually paid out to the borrower.
There's no closed-form formula for APRC, so the calculator finds it numerically (bisection). This is a simplified model for a single drawdown and equal monthly instalments — your bank's stated APRC may differ slightly if the agreement includes extra charges.