Calculate the effective cost of borrowing?

The effective cost of borrowing, often referred to as the annual percentage rate (APR), includes not only the nominal interest rate but also any additional fees or costs associated with the loan. To calculate it, you can use the formula: APR = (Total interest paid + Fees) / Loan amount / Number of years × 100. This gives a comprehensive view of the true cost of borrowing, allowing borrowers to compare different loan options more effectively. Always consider the loan term and repayment structure, as they can significantly affect the effective cost.