Posted by PAW/FL on March 27, 2009, 6:07 am, in reply to "Not so fast there, buddy ...." This post is strictly the opinion of the author
24.26.7.45
--Previous Message--
: The first formula (the 4 step one) -
: unless I'm missing it - isn't asking
: for the costs in any of the values.
: The costs are one of the known values,
: where is it being included?
The costs are calculated by using the monthly payment times the term minus the loan amount. In otherwords, the APR is figured against the full amount paid, which includes fees and charges that are being financed.
: The second formula - the
: Newton-Raphson Method - is a 2-part
: calculation, and you've only shown the
: 2nd part. The FIRST part is where the
: loan costs are used to calculate a
: value for "payment", to be
: used in the 2nd calculation.
That's only true if the payment needs to be calculated. That is already done, using the formula as shown in the first part. It doesn't need to be done again, since the payment is already known.
: Using the ACTUAL 'loan payment' in the
: 2nd calculation would only provide you
: with the actual Note interest rate,
: NOT the APR - because nowhere would
: the loan costs have been factored in.
See above, where the costs are factored in because the "sum of payments" is calculated and used to determine the APR.
and may not reflect the opinion of the management nor of any other user of this forum.
Visit my website
Email me 
I am not an attorney licensed to practice law in the State of Florida,
and I may not give legal advice or accept fees for legal advice.
Message Thread:
« Back to thread