How to Calculate APR | How Credit Card Companies Get You | Annual Percentage Rate

To understand how APR is calculated, let’s say that you were to take out a loan of $10,000 at 10% interest, with a term of 10 years that will be paid back at the end of the term.

That would make your annual interest expenses $1,000 per year.

Let’s also assume your bank has included fees associated with the loan totalling $500.

To get the APR of this loan, you need to add the cost of the fees to the total amount in interest paid.

Spread across a 10 year period, the additional $500 charge is divided by 10, which is $50 per year. $50 is 0.5% of the $10,000 loan, adding 0.5% to the annual percentage rate.

Therefore, the annual percentage rate is 10% + 0.5% = 10.5%.
_______________________
0:00 Intro
0:08 APR Definition
0:33 APR Formula
0:52 APR Sample Usage
1:43 Sample Problem
_______________________

Learn more by visiting the page:

Check out the main Finance Strategists YouTube Page here:
_______________________
Message from the founder:
Here at Finance Strategists, we believe one of the best ways you can help someone is with their finances. We create helpful informational videos and content to help people take control of their finances.

Finance Strategists plans to launch "Finance Strategists for Kids" where we teach fundamental financial concepts to kids in a clear manner allowing them to generate margin in their lives to bless other people. We believe raising up a generation of leaders with financial freedom can change individual lives, neighborhoods, countries, and the world.
_________________________
🔔 Hit the bell next to Subscribe so you don't miss a video!
📧 Fill out this form to receive the "Finance Word of the Day" in your inbox!
_________________________
Follow us on Socials:
Instagram: @financetrategists
Twitter: @FinStrategists