The true cost of a loan offer
Since 1 October 2024, a lender must give you a Key Facts Statement (KFS) for each new retail loan. The KFS shows the annual percentage rate (APR): the interest and all the charges as one annual rate. Type the numbers from up to three KFS documents. This tool calculates the APR again and compares the loans. Your numbers stay in your browser.
Offer 1
Offer 2
Offer 3
| Result | Offer 1 | Offer 2 | Offer 3 |
|---|
How the tool calculates the APR
The tool finds the monthly rate at which the money that you get is equal to the EMIs that you pay. Then it multiplies this monthly rate by 12. Lenders show interest rates with the same procedure. Thus, you can compare the APR with the interest rate. The tool also shows the effective annual rate. This rate adds the effect of interest that the lender adds each month.
- The money that you get is the loan, less the processing fee and the other charges. If the lender removes the insurance premium from the money that it pays you, the tool also subtracts the premium.
- If the lender adds the insurance premium to the loan, you pay interest on it. The tool adds it to the loan for the EMI.
Your KFS must include an APR computation sheet and the repayment schedule. If the APR in your KFS is different from this tool by more than 0.10%, get the APR computation sheet from the lender.
Rules for the KFS
- The APR includes the interest and all charges of the lender. Charges for third parties, for example insurance and legal charges, are also part of the APR. The KFS shows them on different lines.
- A lender cannot charge a fee that is not in the KFS, unless you give your clear consent to that fee.
- The rules apply to all new retail and MSME term loans sanctioned on or after 1 October 2024.
Source: RBI circular on the Key Facts Statement, 15 Apr 2024, paras 3(c), 6, 7, 8 and 11.