Help understanding APRs

katglasgow

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!

DaisyNelson

Not completely sure about my maths, but I get interest as £48.71.
6325 times 7.7, press % = 48.70819
Does anyone else agree?

grumbler

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

DaisyNelson wrote:

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

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!

Rebob

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

grumbler

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 ...