APR %
- Thread starter pipme
- Start date
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Annual Percentage Rate. It's the equivalent yearly interest rate that you pay on things such as credit cards and loans which are normally quoted as monthly interest charges. It was to make things more clear to the unsuspecting borrower! Confuses the hell out of me. 
D
david and julie
The one to watch is the flat rate, if a loan is quoted say 5% flat rate, the APR could be double that. This may help you.
http://www.fisa.co.uk/apr.html
This is also a useful and interesting site which may explain.
http://www.moneysavingexpert.com/
http://www.fisa.co.uk/apr.html
This is also a useful and interesting site which may explain.
http://www.moneysavingexpert.com/
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An example.
5.6 APR%... One way of looking at this is, if you repay nothing for a year you will have accrued 5.6% interest.
The actual monthly interest as a decimal is (( 12 th root of 1+(APR/100))-1) In the instance above.. 5.6% APR = 0.455 % per month
P=Amount borrowed r = rate per month as dec plus one.
n=Term in months
r^n = r raised to the power of n, r^ - n is same as 1 / r^n
£6000 x ( 1.00455 - 1 )
1 - (1.00455 ^ - 36)
=
27.3
1 - ( 0.849227.. )
=
27.3
0.15077
=
£181.07 Per Month. Answer may not always accurately reflect the actual monthly cost due to rounding in the advertised APR.
The flat rate might be £Tot Int / (£Loan x Yrs )
= £518.52 / (£6000 x 3 ) = 0.0288 which is 2.88% near half in this instance (D&J )
Not so easy to calc mort as need accurate picture of amount owed and number of months outstanding.
P
5.6 APR%... One way of looking at this is, if you repay nothing for a year you will have accrued 5.6% interest.
The actual monthly interest as a decimal is (( 12 th root of 1+(APR/100))-1) In the instance above.. 5.6% APR = 0.455 % per month
Using Loan formula. [ P ( r - 1 ) ] / [ 1 - ( 1 / ( r ^ n ) ) ]
P=Amount borrowed r = rate per month as dec plus one.
n=Term in months
r^n = r raised to the power of n, r^ - n is same as 1 / r^n
£6000 x ( 1.00455 - 1 )
1 - (1.00455 ^ - 36)
=
27.3
1 - ( 0.849227.. )
=
27.3
0.15077
=
£181.07 Per Month. Answer may not always accurately reflect the actual monthly cost due to rounding in the advertised APR.
The flat rate might be £Tot Int / (£Loan x Yrs )
= £518.52 / (£6000 x 3 ) = 0.0288 which is 2.88% near half in this instance (D&J
)Not so easy to calc mort as need accurate picture of amount owed and number of months outstanding.
P
I caught my BS overcharging the Mortgage way back after learning how to work out the blessed thing ... how many here argue the toss over 10p change but do not realise they are perhaps being ripped on a loan for £'s ?
Why do the banks get away with such scandulous activities with regard to credit cards and minimum repayments etc ?
We need to be educated in these situations ... it ain't rocket science !!!
P
Why do the banks get away with such scandulous activities with regard to credit cards and minimum repayments etc ?
We need to be educated in these situations ... it ain't rocket science !!!
P
Interesting me old mate, will have to use your formula to work out my mortgage payments. I wonder how many of us are paying over the odds without knowing about it. The problem is we trust those in jobs we know little about. If you don't know a lot about engines we go to a garage and get ripped off there so i suppose banking is no different.
jasy said:
You probably need to be at a defined point to attempt this ... like when you recieve the annual statement .. which tells you how much is outstanding etc.
Generaly they are 'smack on' ... I just found it interesting to have the ability to calc loans mortgages etc.
I reckon the BS's used to con us by charging interest on an annual basis whilst we reduced the outstanding capital on a monthly basis. If I owed £1000 at the outset of the year at say 10% int rate, then the int for the year was £100, even tho' I was repaying some capital monthly.
This practice disappeared quietly with competition from banks who quite properly charged on a monthly basis .. AFAIK.
P
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