AOR to APR - Truth in Lending

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Toan - 17 Aug 2006 18:08 GMT

Hi!

Can someone please help me with this question regarding calculating the APR
that you see in the Federal Truth-In-Lending Disclosures when you sign a
contract for a car loan?

If I have these values, what is the fast way to get to the APR
1) Add on Rate (12%)
2) Term (36 months)
3) Loan start date and loan end date (Feb 1 2005 to Aug 5 2007)
4) Amount financed ($5790)
5) Finance charge ($746)

If I'm missing any information you need to help me with this please tell me.

I'm assuming it's the RATE function but I can't get it to work correctly.
Please help because my job depends on it :-)

A thousand thanks in advance!

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Bernie Deitrick - 17 Aug 2006 20:25 GMT

Toan,

I think it is:

=RATE(36,(5790 +746)/36,-5790)*12

When used in the PMT function:

=PMT((RATE(36,(5790 +746)/36,-5790)*12)/12,36,-5790)

it gives the same payment amount as

=(5790 +746)/36

HTH,
Bernie
MS Excel MVP

> Hi!
>
[quoted text clipped - 15 lines]
>
> A thousand thanks in advance!

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Toan - 17 Aug 2006 21:12 GMT

Hi Bernie,

It does work, thank you. But it seems to only work when all payments are
equal. For example, it will work if the time the contract to the time the
first payment due is 30 days.

But sometimes, the time a contract is signed to the time the first payment
due could be up to 45 days and the remaining payments after the first payment
would be paid monthly (30 days between payments).

How can I account for those extra days only during the first payment?

A thousand thanks in advance.

> Toan,
>
[quoted text clipped - 33 lines]
> >
> > A thousand thanks in advance!

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