Help understanding APRs

Can anyone help me please? I am trying to refine my best plan of action for paying off a flexible loan I have with Egg. The loan currently stands at £6,325.74 and the APR is 7.7%. My monthly repayments are on the 5th of the month and are £183.

I am trying to get this all into an Excel spreadhseet.
So on 5th June, I will pay £183, but obviously insterest has to go back on. I have done my sums as £6,325.74 / 100 * 7.7 = £487.08 / 12 = £40.59
Soon the 6th June my balance will be £6,325.74 - £183 + £40.59 = £6,183.33

Is this right?

Thanks!
Me debt free thanks to MSE :T

Comments

  • DaisyNelson
    DaisyNelson Posts: 763 Forumite
    First Anniversary
    Not completely sure about my maths, but I get interest as £48.71.
    6325 times 7.7, press % = 48.70819
    Does anyone else agree?
    One half of the world cannot understand the pleasures of the other
  • grumbler
    grumbler Posts: 58,629 Forumite
    Name Dropper First Post Photogenic First Anniversary
    Your monthly interest is (1+0.077)^(1/12)-1=0.006200762=0.6200762%
    First month you pay £6,325.74x0.062%=£39.22 as interest and £183-£39.22 =£143.78 as a repayment, etc...

    1 £6,325.74 £39.22 £143.78
    2 £6,181.96 £38.33 £144.67
    3 £6,037.30 £37.44 £145.56
    4 £5,891.73 £36.53 £146.47
    5 £5,745.27 £35.63 £147.37
    6 £5,597.89 £34.71 £148.29
    7 £5,449.60 £33.79 £149.21
    8 £5,300.39 £32.87 £150.13
    9 £5,150.26 £31.94 £151.06
    ................
    35 £902.50 £5.60 £177.40
    36 £725.09 £4.50 £178.50
    37 £546.59 £3.39 £179.61
    38 £366.98 £2.28 £180.72
    39 £186.25 £1.15 £181.85
    40 £4.41 £0.03 £182.97

    More than 3 years :eek: and £815 of interest :eek: . Can you pay more every month?
  • grumbler
    grumbler Posts: 58,629 Forumite
    Name Dropper First Post Photogenic First Anniversary
    Not completely sure about my maths, but I get interest as £48.71.
    6325 times 7.7, press % = 48.70819
    Does anyone else agree?
    You are at odds with maths! What will you do without a calculator?! :eek:
    1% of 6325 is about 63
    7.7% is 63*7.7 = about 450. The right answer is 487! :rotfl:
  • katglasgow
    katglasgow Posts: 404 Forumite
    First Post First Anniversary
    Thanks for your help. I am about to transfer the debt over to 2 credit cards - and am just trying to work out the best deals. Have got a 0% card with Barlcaycard for £3,400 until December that I can then revert to life of balance 6.9%. Hoping to get another card to transfer the balance. I always though the 7.7% APR was a good rate. The loan was £7,500 when I first started paying it off but its totally flexible so I can pay it off early with no penalities. Palying arround with interest rates and doing the sums has actually made me realise how much earlier I could clear this debt if I played the game!
    Me debt free thanks to MSE :T
  • Rebob
    Rebob Posts: 1,010 Forumite
    First Anniversary Combo Breaker Mortgage-free Glee!
    Years ago I was told that there are two % rates on a loan, apr and another. Could someone please explain which one is which (how it applies)?
    Thanks
    The best bargains are priceless!!!!!!!!!! :T :T :T
  • grumbler
    grumbler Posts: 58,629 Forumite
    Name Dropper First Post Photogenic First Anniversary
    Rebob wrote:
    Years ago I was told that there are two % rates on a loan, apr and another. Could someone please explain which one is which (how it applies)?
    If 'another' was 'flat rate', read 'APR vs Flat Rate Calculations' thread ...
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