Hello

Following on from a question yesterday I am looking at an online finance calculator on behalf of a customer

http://www.financecalcs.co.uk/smartcalcs/LoanCalculatorquote.php
And they are insisting that the APR calculated by this calculator is correct. However it does not give an answer comparable to any other online calculators

For example on a loan of 10000 at 7% interest paid over 36 months this give an APR of 13.6%. Other online calculators give a value half this.

Do any of you math whizzes have any idea why this calculator gives such different values and what formula is uses. I obviously don't understand enough about APR to know why this vastly different value is correct and I don't want to look stupid to my customer :(

Thanks a lot

They are using this formula here

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

If I plug in the numbers there except they use t1 = 0 for the left side and t1=1 for the right side

Left side of the equation is just total loan amount

10000 = SUM(k=1 to M) of (P_k*(1+APR/100)^(-T_k)

Where M is number of payments, P_k is payment number k, and T_k is the time that has passed since the loan started (in years).

If I plug in 11.457 for the ARP, the equation works out perfectly if I use T_1 = 1/12, T_2 = 2/13 etc.

It also works for any other combination I tried.

The Wikipedia article says T_1=0 though.