How to Calculate APR Based on Interest Payments
- 1). Divide the interest paid by the principal owed on the loan to find the periodic interest rate for the loan. For example, if $64.80 in interest is paid on $7,200, divide $64.80 by $7,200 to get 0.009.
- 2). Multiply the periodic interest rate by the number of payments per year to find the APR expressed as a decimal. In this example, if payments are made on a monthly basis, multiply 0.009 by 12 to get 0.108.
- 3). Multiply the APR as a decimal by 100 to find the APR as a percentage. Concluding this example, multiply 100 by 0.108 to get 10.8 percent.
