Apr Rate ....................

[ferret69]

if you borrow £300 and payback a fixed sum of £480 what is the APR charged

[Gizmonster]

It depends on when it's due to be paid back.
If it's paid back over 12 months, then it's quite straightforward to work out:
The interest is £180 on top of the £300, giving an APR of 180/300 x 100 = 60% APR.
If the repayment term is shorter, the APR will be higher and if it's longer than 12 months; the APR will be less .... hope that makes sense :)

[ferret69]

Thanks Gizmonster.

[Gizmonster]

Actually ..... thinking about it, it'll also depend on when your repayments are made.
If you make a monthly repayment for 12 months and it's totally paid off after 12 months, the APR will be significantly higher than the 60% figure that I gave.
This is because with the original figure, you're paying interest on the full amount over the full 12 months. If you're making monthly payments, the amount owed is coming down as you're paying some of it off, so you're not getting charged interest on the full amount over the full 12 months - yet you're still paying the same amount of interest (£180) - so the APR will be significantly higher .....

[Gizmonster]

This helps:

http://www.thisismoney.co.uk/money/cardsloans/article-1633405/Loan-repayment-calculator.html

.... assuming you're making 12 monthly repayments and playing with the figures in the calculator, gives 12 monthly repayments of £40.00 - giving an APR of 97.12% .... like I said - significantly higher - assuming you're making 12 monthly repayments. The 60% APR assumes that you pay it back in 1 lump sum at the end of 12 months - not very likely lol :P

[Jackdaw33]

Correct, Gizmo. Someone once tried to explain it to me but I couldn't understand, and I'm no duck egg.

[Jackdaw33]

This may help some people (but not me).

http://en.wikipedia.org/wiki/Annual_percentage_rate

[ferret69]

I know he paid them back at £60-00 a month until it was paid then he could get another loan, he could never get a top up, one loan had to be paid before he could get another, he wanted to know what interest he was paying but I couldn't work it out so thanks for the help.

[Gizmonster]

Paying back over 8 months, instead of 12 months, yields an even greater APR (8 months @ £60 = £480 paid back).
I found the following site:

http://www.whatsthecost.com/loan.aspx

..... and played around with the figures, until I reached:

If you borrow £300 over 8 months, with an APR of 142%, the monthly repayments will be £60.04 per month, which is close enough, so the true APR is approx 142% ........