Annual Percentage Rate
The annual percentage rate of charge, known as APR or APRC is meant to be a common measure so that consumers can compare different loans effectively.
However, depending on where you live, legislators have defined the APR in different ways. APR Calculator lets you calculate the APR both according to European legislation and according to U.S. legislation.
European Method
Directive 2008/48/EC of the European Parliament on credit agreements for consumers defines the APR as the total cost of credit expressed as an annual rate.
The Directorate-General for Financial Stability, Financial Services and Capital Markets Union published a guide on how to calculate the APR.
The European method calculates the APR as the annually compounded rate, which equalizes the present values of all commitments agreed upon by the creditor and the borrower.
APR Calculator lets you import the examples 1 to 29 in the guide.
Note: You may see minor differences in the resulting APR, these are most likely due to rounding/not rounding calculated amounts in the spreadsheet that the guide uses.
United States Method
The Truth in Lending Act (Regulation Z) defines the annual percentage rate as a measure of the cost of credit, expressed as a yearly rate.
The methods for calculating the APR are described in Appendix J to part 1026 - Annual Percentage Rate Computations For Closed-End Credit Transactions.
To calculate the US APR, the actuarial method is used.
APR Calculator lets you import the 20 examples described in Appendix J.