Calculate actual interest rate you are paying due to additional cost of loan
Let us take up this short example of APR calculation & see how it differs from normal interest rates:
Now, applying Newton-Raphson Methodwe get APR (A) =0.0605*1200=72.60%
So from the above calculation we see that for a loan amount of $100 with 12% interest, APR can be as high as 72.60%, depending upon the extra costs &the time taken for repayment.
The calculation is however very confusing & critical. The calculator in this page makes that easier & faster.