Calculator Definitions

1. Amount (Principal):The total sum of money borrowed. This is the initial amount loaned to the borrower.
2. Rate (%):The annual interest rate applied to the borrowed amount. This rate, also known as the Annual Percentage Rate (APR), will be calculated in this example.
3. Years (Term):The original duration of the loan or financial product, expressed in years.
4. Effective Monthly Payment:This is the monthly payment amount that includes the principal, interest, fees, and other costs associated with the loan. This comprehensive payment figure is used to calculate the APR.
5. Calculated Annual Percentage Rate (%):The APR reflects the annual cost of borrowing, including the interest rate plus any additional fees and costs. This comprehensive rate allows for a more accurate comparison of different financial products with varying interest rates and fee structures. The APR may vary between financial institutions.