A Free WordPress Plugin

Effective APR

The plugin uses EAPR by default. You have the option in the settings to change this to nominal APR when calculating repayments.

According to Wikipedia: The term annual percentage rate of charge (APR), corresponding sometimes to a nominal APR and sometimes to an effective APR (or EAPR), describes the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage loan, credit card, etc.


Calculating Effective APR

The formula is:

r = (1 + i)1/n – 1


r = rate per period
i = annual interest as a decimal (eg: 8% is 0.08)
n = number of payments in a year


Given 14.9% interest per year with monthly payments the sum is:

r = (1 + 0.149) 1/12 – 1

r = (1.149) 0.8333333 – 1

r = 1.01164 – 1

r = 0.01164

r = 1.164%

The nominal APR for monthly repayments would be:

r = 1.242%