# 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*

where:

r = rate per period

i = annual interest as a decimal (eg: 8% is 0.08)

n = number of payments in a year

## Example:

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%*