- 1). Multiply your monthly payment by the number of months in the term of the loan. For example, if you have a five-year loan and pay $300 per month, the total is $18,000.
- 2). Subtract the principal, the amount you originally received for the loan, from the total from Step 1 to get the total interest you will pay. For instance, if you received $12,000 and will pay a total of $18,000 over the term of the loan, you will pay $6,000 in interest.
- 3). Divide the total interest from Step 2 by the number of years on the loan. In this example, it will equal $1,200.
- 4). Divide the figure from Step 3 by the total payments you will make from Step 1 to get the APR over the course of the loan. Here, $1,200 divided by $18,000 equals 0.0667, or 6.67 percent.
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