Can anyone calculate the APR for me ??

bettykitten_69

Cant anyone help me calculate the APR of this loan, I have been offered an insurance cancellation rewrite with creation finance but they have failed to put the APR onto the offer letter.

I cant seem to work it out.....

£1300 Loan
£1159.23 Interest
£57.80 payment already made

£2401.43 TOTAL

36 payments of £66.70

The APR of the original loan was 29.8%

If I put £1300 into some online calculators with the APR of 29.8% it says the payment should be £52.63.

Any help would be great.

Many Thanks.

mooomin

You may well have been paying interest on the insurance as well and this is what would change the payment.

Also, some loans are "front loaded" with interest and you could pay off more interest at the start of the loan than closer to the end, much like a mortgage!

I'm not so hot at maths, so can't help with that part, but these could be some reasons why it seems high.

HTH.

CLAPTON

well a simple loan of 1300 with 36 payments of 66.60 with no delayed or missed payments etc would work out at over 55% APR. (ignoring the fact you have already paid some money

what were the terms of the original deal... this must surely be worse that paying the insurance premium

bettykitten_69

Original figures were

£1000 Goods (A) total amount payable £2080.89 (C)
£623.96 Insurance & Warranty(B) total amount payable £1180.35(D)
Total amount £1723.96 (A+B) total amount payable £3261.24 (C+D)


APR 29.8% 36 payments of £90.59

£200 of the insurance & Warranty was a warranty which is staying making the total amount of goods £1300.00

Insurance was £423.96 and interest on that £378.05

Im thinking its a front loaded loan so the APR is 29.8% each year over 3 years 89.4%. 89.4% on top of £1300 is £1162 - not for off their figure of £1159.23 ????

Thats the only thing I can think of.

CLAPTON

you borrowed
1000 for the goods
623 for the warrantly and insurance
i.e. 1623 over 36 months at 29.8% APR
then that should be monthly payments of £65 only and not £90
so something is not right here.

so
-are you sure it says 29.8% APR
-does it actually say APR
-does it give examples of early settlement i.e. after 1/4, 1/2, 3/4 of the time

it looks more like a 'flat rate ' interest rate than an APR.

ylesia

Looks like all the interest has been added on upfront (simple not compound) and then the total due just divided by 36 to get your repayment (ie. 2401.43/36=66.70).

I'm not too familar with this type of loan but I think this is normally the way HP works and if you want to settle early then they calculate a rebate inline with a formula (can't remember it off the top of my head!)

Looks like the interest on the new arrangement is about the same as the one on the first. An APR (or interest rate as it's not really APR by definition) of 29.8% where the interest is calculated once at the start of the loan leads to a much higher interest charge than a normal personal loan when the interest is calculated monthly.

If you were to borrow £1300 on a personal loan then a repayment of £66.70 for 3 years would be the equivalent of about 56% APR!!