How to calculate loan?

N

Newbie!

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Hi,

I wonder if anyone can help me.

On the 21st June 2007, I had the following loan:

Amount of credit: €14230
Period:60 month (repay monthy)
Amount of each installment: €307
Total cost repayable: €18500 (cost of loan =3826)
APR=10%
Interest Rate: 9.63%

On the 11th April 08, after paying €3070 (10months * €307), I reckon I had a loan of approx. €15500 left. I decided to pay more money into the loan. My new repayment monthly is €459. This is the new contract that the bank sent me.

Amount of credit: €12666
Period: 32months
Amount of each installment: €459
Total cost repayable: €14696 (cost of loan =2030)
APR: 11.7%
Interest rate: 11.23%

So, my question is, I dont really know loans and interest are calculated. I guess im dissappointed that even paying an extra €150 per month (50% more) I am only saving €1000 overall. Are the figures above right?

Can anyone offer advice?

Thanks.
 
As far as I can see, the original loan was for €14594, as this gives a €307 per month for 60 months repayment @ 10% APR, and gives a cost of loan of €3826, as you have.

After 10 months, you'd have owed €12617.94, but €12666 may be correct as I don't know the exact dates. @ 11.7% APR, €459.19 should be the repayment per month.

So, by my calculations, you'd have paid €3825.60 in interest on the original loan (or €3826 as you have); you paid €1093.87 interest in the first 10 months and will pay a further €2028 in the 32 months of the new loan, so the new total interest is €3121.87 and the saving is €703.73.

It's unlucky that the interest rate has increased since last summer - at the 10% rate, you'd only have paid €1734.82 interest on the new loan and so have saved €996.91.

I used OpenOffice's spreadsheet to do the calculations - PMT function to calculate monthly (or whatever period you repay) payments given amount borrowed, number of periods and interest rate per period. To calculate the monthly interest rate, I used:

=POWER(10;(LOG10(1+APR)/12)) - 1

APR is the APR rate, so for the monthly equivalent, you want the twelfth root of 1.1 in your case, where the APR is 10% (i.e. after 12 months of compounding, 1 has become 1.1, so the monthly interest is the twelfth root of 1.1). In this case, it's about 0.80% per month.

ATB.

 
Thank you Calculator. I was really hoping you'd tell me that the bank has made an error !! Ah well...c'est la vie!
 
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