Hi all. This post will teach you how to calculate the annual percentage rate. I will use an example to assist us. Say you have these loan terms: So let's say we borrow $500 for 1 year. Assuming that we pay it all off then, here is what the loan looks like. Amount borrowed: $500 Length (in years): 1 Monthly payment: $50 Number of payments: 12 Total interest: $100 (($50 * 12) - $500) Total loan cost: $600 ($50 * 12) To calculate the APR, divide the total interest by the total loan cost and multiply by 100. In this example, the answer is 16.66% APR. Generally, an stated APR means that you are paying that much cents each dollar borrowed or that much dollars each 100 dollars borrowed.