help me work out APR please

philg12

i took a bank loan for my girlfriend to buy a car back in November 2007. i took it as she is a student and couldnt get the loan herself.

I got £4000 over 60months at a APR rate of 21.1%!!

each month payments are £104.33 which makes a total payment of £6259.80!

the loan without interest would be £66.66 a month! so im paying £37.66 interest each month!

how do they work this out??

zppp

philg12 wrote: »

i took a bank loan for my girlfriend to buy a car back in November 2007. i took it as she is a student and couldnt get the loan herself.

I got £4000 over 60months at a APR rate of 21.1%!!

each month payments are £104.33 which makes a total payment of £6259.80!

the loan without interest would be £66.66 a month! so im paying £37.66 interest each month!

how do they work this out??

The interest isn't spread equally over the loan. Therefore at the start of the loan, you will pay almost 100% interest, and this will decrease as you go through the loan. You won't pay any more than whats on your agreement.

Tixy

You are not paying back £37.66 each month in interest or paying of £66.66 per month capital.
At the start of the loan you will be paying far more in interest and as the balances goes down you will pay less each month.

APR of 21.1% is equivalent to monthly interest at 1.608%

So in the first month if you owe £4000, then the interest will roughly be 4000x 1.608% = £64.32. The next month you will only owe £3960 (being 4000 less £104 repayment plus £64 interest) so the interest that month will be £63.67.