Do you need calculate the APR obtained by an operation with compound interest? Our online calculator allows you to obtain the percentage of return subject to the investment.
Its operation is very simple and all you need to do is fill in the fields of the initial capital, the final capitalThe starting date on which the APR began to be applied and the date of termination:
What is the APR?
The APR, or Annual Percentage Rate, is a percentage indicator that shows the cost or effective yield of a financial product, be it a deposit, a loan, a mortgage, etc.
As a particularity to highlight, the interest earned each year is reinvested at the same rate of interest until the termination date of the contracted financial product.
Formula for calculating the APR
For calculate the Annual Percentage Equivalent Rate of an investment subject to this type of compound interest it is necessary to apply the formula that you have above these lines, being:
- Cnfinal capital
- C0initial capital
- n: duration of the operation in annual installments
What is the APR on a mortgage
The APR on a mortgage is a measure that you can use for compare the offers offered by different banks.
Logically, it is in your best interest to keep the APR of a mortgage as low as possible. possible since they are the total interest that our bank will charge us each year.
It is important that you always look up the APR of a mortgage before you take it out and pay attention to the fine print, since banks often include fees and commissions (origination fees, for example) and insurance (life or home insurance). The more products that are linked to the contracting of the mortgage, the more the APR will rise and the more the total cost of the mortgage that we have requested from the bank will increase.
Another important aspect of valuing a mortgage consists of calculating the difference between the APR and the interest rate. For this you have to apply the following formula:
APR - interest = APR - (Euribor + spread of the offer)
If the difference between the APR and the mortgage interest is low, it is a positive sign.
What is the APR of a loan
As with the mortgage, when taking out a loan, the APR is the most important indicator to look at. After all, it is an indicator that allows you to calculate the effective cost associated with taking out the loan.
Again the APR on personal loans includes commissions such as start-up and early cancellation fees. Its value also depends on other parameters such as the nominal interest rate that can be applied or the number of times interest is paid during the year.
In short, if you hesitate to contract different loans to be repaid in the same period of time, it would be normal to bet on the one offering the lowest APR. but do not take it as an absolute benchmark as there are always other conditions or fine print associated with the financial transaction.