For a standard loan, the percent annual rate is calculated as the interest paid divided by the amount borrowed all times 365.

Question

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The percent annual rate, typically referred to as the Annual Percentage Rate (APR), is calculated based on the total cost of borrowing, including interest and fees, divided by the amount borrowed, and then adjusted to reflect the annual rate. It does not simply use the interest paid divided by the amount borrowed times 365.

For a Standard Loan, the Percent Annual Rate Is Calculated