How to calculate annual percentage rate

kyleb · 03-20-2009, 01:11 PM

Hi all.

This post will teach you how to calculate the annual percentage rate. I will use an example to assist us.

Say you have these loan terms:

Quote:

Will lend you between $500 and $1,500. Fee is $50 ($500) or $60 ($1,500) each month. Amounts in between will have a prorated fee.

So let's say we borrow $500 for 1 year. Assuming that we pay it all off then, here is what the loan looks like.

Amount borrowed: $500
Length (in years): 1
Monthly payment: $50
Number of payments: 12
Total interest: $100 (($50 * 12) - $500)
Total loan cost: $600 ($50 * 12)

To calculate the APR, divide the total interest by the total loan cost and multiply by 100. In this example, the answer is 16.66% APR.

Generally, an stated APR means that you are paying that much cents each dollar borrowed or that much dollars each 100 dollars borrowed.

***VamPyroX*** · 03-24-2009, 11:05 PM

I remember this from my business courses at RIT.

CaoYi · 06-08-2010, 08:42 AM

Quote:

Originally Posted by kyleb

Hi all.

This post will teach you how to calculate the annual percentage rate. I will use an example to assist us.

Say you have these loan terms:

So let's say we borrow $500 for 1 year. Assuming that we pay it all off then, here is what the loan looks like.

Amount borrowed: $500
Length (in years): 1
Monthly payment: $50
Number of payments: 12
Total interest: $100 (($50 * 12) - $500)
Total loan cost: $600 ($50 * 12)

To calculate the APR, divide the total interest by the total loan cost and multiply by 100. In this example, the answer is 16.66% APR.

Generally, an stated APR means that you are paying that much cents each dollar borrowed or that much dollars each 100 dollars borrowed.

The answer is 16.66% = (($50 * 12 -$500) / ($50 * 12)) * 100% APR.

03-24-2009, 11:05 PM	#2 (permalink)
*VamPyroX* bloody phreak from hell Join Date: Feb 2003 Location: 40.18, 58.41 Posts: 34,136	I remember this from my business courses at RIT. __________________ Check out my city... C L I C K H E R E! (If you've already visited yesterday, visit again today!)

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