How is APR calculated

Robert_Sterling_3

I shall say no more in this thread.

Tr@cker

Some superb anglers on this site. Cracking bit of bait.

hopefulfooluk

Okay, here goes:

Monthly rate to APR:

(((x/100+1)^12)-1)*100 = APR (where x = monthly rate)

APR to Monthly Rate:

(((y/100)+1)^(1/12)-1)*100 = Monthly Rate (where y = APR)

Hope that helps,

Chris

Robert_Sterling_3

What yoiu are showing is how to move from monthly rates to annual rates and vice versa but the post above shows a  100% 24 carat complete misunderstanding of what an APR actually is.
One thing it is not is the rate "actually" charged on a loan.

EmehEm2005

I suggest this site -
http://www.fsa.gov.uk/consumer/04_CREDIT_DEBT/mn_apr.html
to learn how to calculate APR etc etc.

trace-j

Some info from the OFT re calculation of APR under the Consumer Credit Act.

Robert_Sterling_3

Hey APR Calculation ...

This is great ...

Link to Office of Fair Trading

Go straight to page nine

Robert_Sterling_3

See following post

Robert_Sterling_3

MarkyMarkD wrote: »

I've been busy.

As usual, you are wrong.

Read my post properly.

Headline rate 4.5%. Nothing to do with APRs. At a headline rate of 4.5%, the interest payable on an interest-only £100k mortgage is £4,500 which is £375 per month.

There's nothing "discredited" about calculating the monthly payment as 1/12 of the annual payment - that's the only way to do it, other than the pedantic method (presumably favoured by yourself) of dividing the annual payment by 365 (and, pedantically, 366 in a leap year) and then calculating each month's payment by multiplying it by 28,29,30 or 31 depending on the number of days in each month. But no institution does it that way.

I do understand APRs, but you do not appear to understand English.

£100,000 @ 4.5% for one year gives £4,500 interest if, and only if, the interest is paid in one installment at the end of the year.

It certainly does not give £375 each month.