calculating apr help

the_first_step

Hey

I hope someone can help me out here.
I'm trying to find the fromular to calculte APR, for for a basic fixed rate loan.

I have searched all over the net, but I can never find two fromulars that match.

Example:

Mr X took a loan for 10K over 3 years - APR rate of 7% - monthly repayments = blar blar.. and was going to start paying his loan back straight away. (aka no payment break)

Then Mr Y took out a loan for 10K over 3 years same APR rate, but then decided to choose for an optional 2 month break. Mr Y would pay back more money than Mr X , as he was been charged interrest from the start of the loan.

Then Mr Z took out a loan for 10K over 3 years same APR, but also decided to choose for an optional 2 month break, plus was charged a £50 couier fee, so he could pick up his new car asap. Therefore Mr Z is paying back more money than Mr Y and Mr X.

I'm trying to find a formular that I can use, so that I can work backwards from the total charges to work out the correct APR. Even though all 3 people have taken out the same loan, with the same advertised rate, Mr Z "real" rate is much higher, due to the total charges he is paying back.


Any help would be great!

CLAPTON

the 'real' APRs in your example are all the same

in mr Y case the APR is 7% but he pays more interest for the reason you give... but that doesn't change the APR of the loan

in Mr Z case he pays for an additional service .. the APR is unchanged at 7%
if the 50 was compulsory then it should be included in the APR but as its an additional service it's not.

the_first_step

If we were to add the additional interest caused by the “holiday break” and “any other chargers” to total amount of money paid back. Call it “T” for total paid back. We know the term is fixed and the monthly repayments are fixed. Is there a formula we can use so we can compare all three examples to one another?
Technically the APR rates are all the same for all three examples. But if you were to work backwards on what “T” is, then customer Z might as well have taken a loan out for say 9%APR (example) as he would be paying back the same “t” as if he had take out a loan for 10K over 3 years at 9%APR (example) and started paying back straight away with no other additional fees.