What is the best way to say/use "Understand"
わかります/わかりました
or
なるほど
or
Is there something else more common? (If so can you give me an example of when to you would use it.)

Question

Answer

わかります means "I understand it so far/know your feeling".
わかりましたis most common i think. 
なるほどis good too.

Alternatives...
了解(りょうかい)ですis like "roger, copied." but used commonly.
オッケー(okay!) also works, but sounds very casual.

Don’t miss out on the opportunity to learn a language from the comfort of your own home. Browse our selection of experienced language tutors and enroll in your first lesson now!