a question

[lostwithmath]

If I borrowed $2470 from a bank for 9 months. At the bank they gave me a discounted note at 7.5%.

taking in to account for the interest paid in advance, how much did I receive from the bank the day I took out the laon

what is the actual rate of interest I paid for the loan

 

[tkhunny]

If I borrowed $2470 from a bank for 9 months. At the bank they gave me a discounted note at 7.5%.

taking in to account for the interest paid in advance, how much did I receive from the bank the day I took out the laon

what is the actual rate of interest I paid for the loan

First, get a new screen name. I am very much discouraged from trying to help you with an attitude like that. I hope it's just a joke, but I still don't like it.

2470*.075 = 185.25 -- Interest for period
2470 - 185.25 = 2284.75 -- Check in hand, today.

The "actual" interest rate is a bit difficult to pin down without a very specific description of what you mean by "actual".

(2470/2284.75) = 1.081081081

A couple of major variations:

Simple Interest paid in arrears: 0.081081081/9*12 ==> 10.8108108%

Monthly Compounded Interest paid in arears: 1.081081081^(12/9) ==> 10.9543558%

 

[Denis]

guess TK didn't have his 2 coffees yet...

Interest = 2470 * .075 * .75 (9 months) = 138.93 (floored!)
Cash = 2470 - 138.93 = 2331.07

True interest = (2470 / 2331.07 - 1) * 4/3 = 7.947~ %

 

[tkhunny]

Maybe, but I think I need to know the terms better.

You crazy Canadians probably allow only LEGAL loan terms! A flat charge of 7.5%, even for the brief span of the loan, wouldn't surprise me down here. Ever try to buy a car in Georgia?

You must read your loan terms VERY CAREFULLY!!!!!!

 

[Denis]

Ever try to buy a car in Georgia?

Is that where Honest John hails from?

Btw, on "discounted at 7.5%", I took that as an annual rate of 7.5%,
not a 9month rate...hence the odd looking results!

Of course, if 185.25 (7.5%) is the "discount" then annual rate = 10.8~%.

9 months = .75 * 365.25 = 273.9375 days
185.25 / 273.9375 = .6762~ cost per day
.6762 / 2284.75 = .00029598 % (daily factor)
.00029598 * 365.25 = .108108 : 10.81%

Btw, best time to take a "9 month loan" is May 1st.