Alan Cohl obtained an installment loan for $3,560. His finance charge is $308.56, and he will make 18 monthly payments. What is the APR?

The APR for Alan Cohl's installment loan is 124%. ;

Answered by triharsh1007 | 2024-06-19

To calculate the Annual Percentage Rate (APR) for Alan Cohl's loan, we need to consider the finance charge, the loan amount, and the number of payments he will make.
The formula to calculate APR is a bit complex and generally involves iterative methods and financial calculators. However, a simple method to estimate the APR involves dividing the finance charge by the loan amount, then dividing by the number of years, and finally multiplying by 100 to get a percentage.
Alan Cohl's loan finance charge is $308.56, the loan amount is $3,560, and there are 18 monthly (1.5 years) payments.
Divide the finance charge by the loan amount: $308.56 / $3,560 = 0.0867 (rounded to four digits).
Divide the result by the number of years: 0.0867 / 1.5 = 0.0578.
Multiply by 100 to get a percentage: 0.0578 × 100 = 5.78%.
This gives an estimated APR of 5.78%. Please note, this is a simplification and the actual APR might slightly vary.

Answered by CharlotteRampling | 2024-06-24

The APR for Alan Cohl's installment loan is approximately 69.35%. This is calculated by taking the finance charge, dividing it by the loan amount, and adjusting it by the number of payments made in a year. The final APR indicates the yearly cost of borrowing the loan amount.
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Answered by triharsh1007 | 2024-12-26