The APR is the actual yearly interest rate paid by a borrower, figuring in the points charged to initiate the loan and other costs. Interactive APR (Annual Percentage Rate) Calculator Calculate actual interest rate you are paying due to additional cost of loan Principal (Amount of money borrowed) Additional Cost (Processing fee, bond fee etc ) Interest Rate (Percentage of interest paid annually on principal) No of Months (No. of months over which you will repay this loan) An Example Here is a short example of how to calculate the APR and see how it differs from normal interest rates: Loan Amount (P) = $100 Additional Cost (E) = $5 Interest Rate (I) = 12% Monthly Interest Rate (r) = R/100*12=0.01 Number of month (n) = 1 Now, applying Newton-Raphson Method, we get an APR (A) =0.0605*1200=72.60% From the above calculation, we see that for a loan amount of $100 with 12% interest, the APR can be as high as 72.60%, depending upon the extra costs and the time taken for repayment. The calculation is very confusing. The calculator in this page makes that easier and faster.