Math Question

[kingoffinance]

I need to manually calculate an APR payment. Can someone please head me in the right direction to do this? Any assistace will be greatly appritiated.

Thank you in advance.

Anthony

 

[rhmerrill]

Depends on how the loan is structured... can you give a bit more detail?

 

[kingoffinance]

It is a simple interest loan. With amont financed, term, apr, days til first payment.

Please let me know if you need anymore information.

Thank you in advance,

Anthony

 

[mdmilner]

You know, just as an aside - if precision isn't required, there is a simple approach to estimating payments with interest.

Begin with the starting balance (present value)
Get the ending balance (future value = 0 frequently)
Find the difference, divide by 2.
Multiple the interest rate by this number - this gives you yearly interest.
Multiple the yearly figure by the number of years.
Add the total difference (3rd item) to the total interest.
Divide by the time periods.

This gives you a payment estimate that should be pretty darn close.

Step 2 is relevant to leasing. 20,000 vehicle leased for 5 years with a future value of 5,000 -- obviously your payments will be 15,000 + the interest. The 'average balance' during this time period should be, approximately 12,500 ((20000+5000)/2) - find the interest in that amount and add it to 15,000 -- divide by 60 (number of months) and you get a monthly payment amount.

Again - this is VERY imprecise. This is the kind of math I work out in my head without paper & pencil.

Mike