What is APR in a loan?
APR (Annual Percentage Rate) is the total yearly cost of a loan, expressed as a percentage. It includes the interest rate plus processing fees and other mandatory charges. APR is usually higher than the quoted interest rate, and it is the fairer number for comparing loans. In India, RBI requires lenders to show APR in the Key Fact Statement.
APR loan ki asli saalana cost hai: byaaj plus processing fee aur doosre charges. Isliye APR hamesha interest rate se thoda zyada hota hai. Do loan compare karne ho to APR dekhiye, sirf interest rate nahi.
APR vs interest rate
A ₹1 lakh loan at 14% interest with a ₹3,000 processing fee costs more than 14% a year, because you pay the fee but receive less money upfront. APR folds that fee into one annualised rate. 'Flat' rates look even lower, because they charge interest on the original principal for the whole tenure. APR removes that illusion.
Where you will see it
In the Key Fact Statement for every retail and MSME term loan, and in digital lending apps before you accept. If an app doesn't show APR before disbursal, treat that as a red flag.
Common questions
What is APR in a loan?
Annual Percentage Rate: the total yearly cost of the loan, including interest and mandatory fees, as a percentage.
Why is APR higher than the interest rate?
Because it also includes processing fees and other charges you must pay to get the loan.
APR kya hota hai loan mein?
APR loan ki kul saalana cost hai, byaaj aur fees milakar. Yeh interest rate se zyada hota hai.
Related
ZyroAI products for this: Loan Management System.
Written by the ZyroAI team for people building in Indian BFSI. Regulatory rules change, so for binding requirements check the current RBI, NPCI, UIDAI or relevant regulator circular. Last updated 2026-09-24.