I have been racking my brain and using the internet to find a way of calculating Typical APR on a Payday Loan. I work in the industry and I know for a fact that the industry approved calculator released by the lending industry gives a very different result to the pages of supposed APR help availabel for Excel.
WHat i want to know is how do i get a result of 734.2% APR when the amount borrowed is £350, the amount repaid is £405.97 and the face rate is 15.99% (which is an actual interest rate of 19.03% or an effective annual rate of 228.40%) and finally the term is 30 days
The formulae i have seen are something like the following:
=EXP(LN(405.97/350)*365/30)-1
or using =RATE in combination with a bunch of different factors (N, PMT, PV, FV)
Nor does this work which was suggested by someone:
=((1.1599^12)-1)*100
Can ANYONE shed some light on this. I know the answer, I just want to figure out the calculation
Many, many thanks
Midds
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