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Payday Loan Assistant Required

EDIT: Sorry I meant assistance there...

Hi, I am reading up on payday loans and have become a little confused when it comes down to the APR rates.

Here is an example from a typical lender... Loan amount: 100 Total repayable: 125 Term: 31 days Typical APR %: 1286.10%

I used this payday loan calculator and it was only spewing out around a

300% APR rate...
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I am a little confused how the rate of 1286.10% is exactly calculated, can anyone walk me through this? Thanks for your help!:D
Reply to
Ryan6
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I get 1,387% for a 365 day year.

It's compound interest, so it is 1.25^(365/31), or antilog(log(1.25) *

365 / 31)).
Reply to
David Woolley

Sorry. Forgot to subtract out the principle, after which my calculation agrees.

Corrected: It's compound interest, so it is (1.25^(365/31) -1 ) *100%, or (antilog(log(1.25) * 365 / 31)) -1) * 100%.

Reply to
David Woolley

princip*AL*

Roughly. Your 1387% would then become 1287%, but actually the 7 in there is rounded from 6.85, and in transcribing from your calculator you have missed out the 3 before the 6, so a more correct answer would be 1284%.

Over the course of the 400 year cycle on which leap year rules are based, the average year has 365.2425 days. I'm not sure this is in keeping with the official APR rules, but if you use that value in place of 365 in your formula, then you do in fact get 1286.10%.

Reply to
Ronald Raygun

Ok so your problem seems to be a little complicated to me. I think you should take out the assistance from the lawyer or so.

Reply to
Andrew Jones

This one seems to work:-

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Reply to
John

I make it 1283.69%.

Rate for 31 days is 25%

To work out APR from that

((1 + 0.25)^(365/31))-1 = 12.8369

Multiply that by 100 and you get 1283.69%

Reply to
Jonathan Bryce

I'd just like to thank everyone who has got back to me on this issue. I am now a lot more clearer on the calculations of APR rates. Many thanks.:D

Reply to
Ryan6

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