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Formula to calculate the %APR on a weeklt loan

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    Formula to calculate the %APR on a weeklt loan

    Hi I was wondering if someone could help me with this. I have figures for a 10 week loan including the yearly APR% but need to find the formula that calculates the APR%, so work backwards. These are the figures I have

    loan amount - £350.00
    Loan Charge - £175.00
    Loan Period - 10 weeks
    Weekly Repayments - £52.50
    Weekly interest - 5%
    Annual Interest - 260%
    APR - 5763.6%

    Can anyone help with the formula that would calculate the APR figure based on the above.

    Thanks in advance
    Tony
    Last edited by tonicdesigns; 05-22-2014 at 11:50 AM. Reason: Spelling mistake

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    Re: Formula to calculate the %APR on a weeklt loan

    [....deleted....]
    Last edited by joeu2004; 05-22-2014 at 07:00 PM. Reason: misdirection

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    Re: Formula to calculate the %APR on a weeklt loan

    Hi joeu2004

    thanks for the reply. As far as I can see, the figures are correct

    Loan Amount is £350.00
    Loan Charge is £175.00
    Total to pay back is £525.00
    Loan Period is 10 weeks
    10 weekly repayments of £52.50
    weekly interest is 5%
    interest for loan period is 50%
    yearly interest is 260%
    APR is stated as 5763.6%

    To answer your question, yes a weekly rate is annualized by multiplying by 52
    Thanks again and hope this helps

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    Re: Formula to calculate the %APR on a weeklt loan

    [....deleted....]
    Last edited by joeu2004; 05-22-2014 at 06:59 PM. Reason: misdirection

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    Re: Formula to calculate the %APR on a weeklt loan

    Quote Originally Posted by tonicdesigns View Post
    As far as I can see, the figures are correct
    Loan Amount is £350.00
    Loan Charge is £175.00
    Total to pay back is £525.00
    Loan Period is 10 weeks
    10 weekly repayments of £52.50
    weekly interest is 5%
    interest for loan period is 50%
    yearly interest is 260%
    APR is stated as 5763.6%
    Aha! I see I misinterpreted "loan charge" as "loan fees". The two are very different. You are using "loan charge" correctly: total interest.

    Also, I misunderstood the type of loan. There are two types based on how interest is repaid: finance charges v. amortization. I was thinking of the latter. But yours is the first kind.

    In that case, all of the terms of the loan are copacetic. So I deleted my previous responses because they are misdirections.

    The APR is calculated as follows:

    =(1+RATE(10,52.50,-350))^52 - 1

    In effect, it determines the "effective" (compounded) annual rate for the equivalent amortized loan.

    [EDIT] I might note that APR calculated in this manner is a fictitious rate. Some believe it is useful for comparing loans. I do not. In any case, it has nothing to do with how periodic interest is calculated and repaid in reality.
    Last edited by joeu2004; 05-22-2014 at 07:15 PM. Reason: cosmetic

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    Re: Formula to calculate the %APR on a weeklt loan

    Thats brilliant. Thank you very much for this

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