how do you calculate apr 
the formula for calculating apr is straightforward it consists of multiplying the periodic interest rate by the number of periods in a year in which the rate is applied the exact formula is as follows apr fees interestprincipaln 365 100where interest total interest paid over life of the loanprincipal loan amountn number of days in loan term begin aligned text apr left left frac frac text fees text interest text principal n right times 365 right times 100 textbf where text interest text total interest paid over life of the loan text principal text loan amount n text number of days in loan term end aligned apr nprincipalfees interest 365 100where interest total interest paid over life of the loanprincipal loan amountn number of days in loan term the bottom linethe apr is the basic theoretical cost or benefit of money loaned or borrowed by calculating only the simple interest without periodic compounding the apr gives borrowers and lenders a snapshot of how much interest they are earning or paying within a certain period of time if someone is borrowing money such as by using a credit card or applying for a mortgage the apr can be misleading because it only presents the base number of what they are paying without taking time into the equation conversely if someone is looking at the apr on a savings account it doesn t illustrate the full impact of interest earned over time aprs are often a selling point for different financial instruments such as mortgages or credit cards when choosing a tool with an apr be careful to also take into account the apy because it will prove a more accurate number for what you will pay or earn over time though the formula for your apr may stay the same different financial institutions will include different fees in the principal balance be aware of what is included in your apr when signing any agreement 