APR and loan fees: compare the money received with the money repaid
To compare borrowing cost, record what you actually receive and every required payment. A rate computed on principal alone can miss the effect of charges deducted before disbursal.
Build the complete cash-flow series
Write the net disbursal as the starting cash received, then list repayment amounts and dates. Identify mandatory upfront costs paid separately and ask the lender how its disclosed APR treats them. Avoid calculating a supposed annual cost by simply adding a fee percentage to an annual interest rate; the payment schedule and timing matter. Use the written overall-cost disclosure as a comparison input and ask about differences you cannot explain.
A worked situation
A ₹3 lakh principal with ₹6,000 deducted provides ₹2.94 lakh before any other deduction. If repayments are still based on ₹3 lakh, the effective cash-flow cost differs from a no-fee loan providing the full ₹3 lakh. The same nominal rate does not make those transactions identical.
Your next-step checklist
- Record usable funds after deductions
- Include the timing of all required payments
- Ask what the disclosed APR includes
Can I add a 2% fee to a 12% rate and call APR 14%?
That shortcut ignores repayment timing and the loan term. A proper comparison uses the full cash-flow pattern and the lender's stated calculation assumptions.
Official references and further reading
These links help you check current information. A provider-specific page describes that provider’s process; it is not a universal eligibility rule or a claim of partnership.
General educational information, not a personalised credit recommendation. Examples use assumed inputs. Rates, charges, eligibility and documents vary; confirm your own lender’s current written terms.