Re: Loan accounts

John,

APR is the interest rate (annual percentage rate).

The amount borrowed is the original principal of 10,300 (or 10,370 if 
the 70 fee was added to the borrowed amount).

With a loan of 10,300 and 96 monthly payments of 230.95, the only 
unknown is the interest rate.  If you enter either of the rates in your 
email (14.4% or 25%) into Moneydance, the program will not compute a 
monthly payment of 230.95.  Using 10,300 and 96 payments of 230.95 a 
loan amortization program that I use, calculated an interest rate of 
22.320%  If you enter 22.320% into Moneydance it computes monthly 
payments of 230.96 - close to your actual payment.  Unfortunately the 
Moneydance program is a simple program in that it will not solve for 
unknowns.

In addition, when additional principal payments of 4,000 & 3,000 were 
made, the loan must be recalculated by adding the payments in the Extra 
Principal column for Moneydance.

If you know the principal amount borrowed, the fixed monthly payments 
and the term of the loan then, the interest rate (APR) might have to be 
computed for the Moneydance program.  Normally, if you have a good APR 
the Moneydance calculation should be close.  If not, then keep changing 
the APR until you get the actual monthly payment.

In addition, the method the lender uses to compute the compounding of 
interest will impact the calculations.  Generally, monthly compounding 
is utilized which, I believe, is the method Moneydance uses.

   Ed Melia, Sacramento, CA

On 10/14/2011 1:02 PM, John Sampson wrote:
> I see there are both an APR and an interest rate but I don't know why. 
> I expect this is what led to the confusion -
> perhaps the APR, whatever that is, is the figure to use in 
> calculations, not the interest rate. Moneydance's loan
> calculator probably applies to a particular type of loan extant in the 
> USA.
>
> I had paid lump sums during the period of the loan as well as monthly 
> payments. I have paid off the loan now.
> I did not understand the terms "points" and "rates". I see in the loan 
> calculator a space for APR, but none
> for interest rate. It may be that "Amount borrowed" is the total 
> charge for credit rather than the amount of credit.
>
> For what it is worth, the figures were:
>
> Total cash price £11,445
> Deposit £1,145
> Total charge for credit £11,941.20
> comprising interest £ 11,871 and document fee £70.
> Interest rate was 14.4% p.a.
> There were to be 96 monthly payments of £230.95.
> Interest was calculated in advance on what would be the daily 
> outstanding balance
> of the amount of credit (£10,300) on the assumption that I kept up the 
> payments.
> APR was 25% FWIW.
> I paid two lump sums during the course of the loan, £4,000 and £3,000. 
> The timings
> of these would presumably affect the final settlement figure.
> I made twelve monthy payments in the event before settling with a sum 
> of £2377.16 which
> included a settlement fee of 30 days interest.
>
> Regards
>
> _John Sampson_
>
>
>
> On 14/10/2011 19:50, Edward A. Melia, C.P.A./Attorney wrote:
>> Yes, you are correct.  I saw 800 pounds in John Sampson's email and 
>> jumped to the conclusion (incorrectly) that he also used the term 
>> fortnightly.  Careless of me not to have checked the postings.  
>> Looking back over the emails, I did not see any details regarding 
>> John Sampson's problem other than an 800 pounds difference.
>
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