This is an ARCHIVE talk-page for: Annual percentage rate.
Notes:
|
Dictionary definition that looks like it was written by someone who doesn't understand what he's defining. - Kenwarren 02:10, Jul 26, 2004 (UTC)
end moved discussion
user:GraemeL and user:Chuck1962 (who is presumably the same as the anon editor user:136.2.1.103) have been repeatedly inserting and deleting the text below. Rather than continuing the revert war, let's discuss the proposed addition here for a while and see if we can work out the objections and concerns. Rossami (talk) 17:43, 8 September 2005 (UTC)
Loan retention assumed to equal loan pay-back period
Another problem with the APR calculation is the assumption that an individual will keep a particular mortgage loan until it is completely paid off resulting in the up-front fixed closing costs being amortized over the full term. The usual pay-back periods are 30 and 15 years but how many people keep the same mortgage that long? Not many, because the odds someone will either refinance or move before the loan is paid off are very high. Computing the APR over the full loan term deflates the apparent cost of the loan, making it harder to decide if it truly makes sense to refinance an existing mortgage. An APR calculator should allow the user to enter a loan retention period or time-in-loan period to more fully gauge the cost of the up-front fixed closing costs.
I would like to thank GraemeL and Rossami for the warm welcome they have given me on my first attempt to contribute content to wikipedia.org! Yes, you were right, I am a spammer of the most monstrous proportions (a realestate agent's website from Ann Arbor, Michigan might make spam fodder out of about 0.045% of your user base!) Hell, I don't even own a bank so where did I get off thinking I could educate others in the arcane world of Annual Percentage Rate calculations! My proposed changes just don't add up to the high standards of the commercial links already on the page that are being given a free pass( http://www.mortgages-loans-calculators.com/calculator-mortgage-apr.asp)! I especially liked the trudging through the instructions from the OCC to download and try their APR calculator. Hell, after about 15 minutes I was actually able to run their bloated, over-engineered product and conclude that it didn't address the issues you so generously censored from my edits!
The comments from GraemeL were particularly fun and just filled me with warm fuzzies. For example, GraemeL claims that my lame website doesn't support non-windows browsers but fails to mention that the APR calculator at www.mortgages-loans-calculators.com assumes a java plug-in that is geared toward Windows IE and may not be readily avaliable on non-Windows browsers (It wouldn't run on my version of Mozilla.) He also claims the good folks at wikipedia.org don't need another APR calculator (GraemeL's non-myopic, penetrating, well researched views are o-so appreciated---I'm sure he's had to spend plenty of time trying to compare different rate and closing cost combinations from different lenders on his mortgages!)
The fact of the matter is that my APR calculator was written with the needs of mortgage borrowers in mind because I personally have run into the problems my calculator seeks to solve. Check it out for yourself, most of the APR calculators on the web are offered by Lenders or Mortgage Brokers; that is, people who are trying to sell you a loan. Furthermore, I have yet to find another APR calculator that lets one select a loan retention period shorter than the loan term. This feature allows one to find out what the pay-back period for the closing costs is or if it makes sense to re-finance an existing mortgage.
I will end by pointing out that the over-all jist of the APR calculation article is to not simply define its most prominent feature, but to place heavy emphasis on the real and serious shortcomings of it from a consumer point of view. The over-all direction of the article is pro-consumer information anyone involved in securing a mortgage will inevitably become caught-up in. My additions most certainly strengthen that direction and would certainly be appreciated by someone looking to either re-finance or purchase a home.
Good evening. I'm sorry that you took my comments as hostile. I actually don't have strong feelings one way or the other about the addition you proposed. I merely would prefer that the dispute be resolved through discussion. On Wikipedia, that generally happens better and more completely when we discuss concerns on the article's Talk page than when we make competing edits to an article. When two editors acting in good faith start repeatedly undoing each others' edits without explanation, we call that a revert war.
I certainly understand your comment about the weaknesses of some of the existing links in the APR article. I may have even been the one who added that link in an early draft of the article. Corrections or improvements are always welcome. We do tend to defer to "impartial" sources because we've had problems in the past with wikispam. The OCC's APR calculator may have lots of shortcomings but no one can accuse them of having an ulterior motive. If you know of a source for a better traditional APR calculator, I for one would encourage you to replace the OCC link.
I also think I understand your comment about the shortcomings of the traditional APR calculation. It's an interesting correction. Can you provide an independent source for your analysis. The difficulty that we run into is that Wikipedia has a strong policy against original research. We've found that to be an essential control in our quest to stay true to our goal - the creation of an encyclopedia. (Note that the proscription against original research is not what many people assume from the name. I encourage you to read the full article.) If this is your personal analysis and original thought, our policy says we can't keep it in the article. On the other hand, if you can provide an independent citation for your analysis, then it is probably appropriate to keep in.
Lastly, I would encourage you to be patient with folks like GraemeL. Wikipedia really does have problems with serious spammers and we depend on folks like him to volunteer to patrol and keep them out. They see so much abuse that sometimes it's hard to remember to assume good faith. When mistakes happen, though, we can generally work them out through discussion. Thanks for your patience. I hope you stay and continue to contribute. Rossami (talk) 04:26, 9 September 2005 (UTC)
a small point: it is a violation of RESPA for a lender to require a borower to use a specific closing agent (attorney or title agent or otherwise) It is a small distinction but technically it is against the law to REQUIRE it. Lenders will usually assume that you are willing to work with their preferred closing agent it is true. Thanks - Ryan -[70.176.77.27 00:14, 7 July 2006]
I'd like to see some more formulas and examples on the main page for this subject. I'd always assumed that APR was what would end up outstanding on a borrowed/lent sum at the end of a year but it seems that what I was thinking of was the "effective annual rate". It appears that if you borrow money at 10% APR, you pay differently if the interest is calculated annually, monthly, or weekly. I am pretty strong mathematically but this all seems a bit odd to me. I think this is something that Wikipedia could really make a strong contribution to clarifying for people. Pictures would be nice :)
I'm putting in a USPOV note. The definition at the beginning of the article, which I do not understand, appears to be using a "monthly interest rate". The example calculation doesn't even give a precise number.
The EU actually gets this one right: the EU definition is what an annualised percentage rate is. It's very simple: if you give $100,000 to a bank that compounds interest continuously at a rate of x% p.a., and you take out a loan of $100,000 with an APR of x at another bank, the (included) payments will cancel out exactly.
That's the gist of it; that the US gets the definition wrong (apparently?) should be a note relegated to a slightly later point.
Details about how APR is criticised because it wasn't made clear enough which payments to include or not to include in its calculation are a relatively minor issue, to be honest. I don't think the article should be giving them quite as much weight.
RandomP 15:00, 26 September 2006 (UTC)
Okay, now let's end this interweaving of comments and try to fix the article. During this discussion, I have convinced myself that our opening example is at best only a very rough approximation under any of the allowed jurisdictions. So:
Short answers:
My suggestion:
The whole subject area on WP is, to be honest, a bit of a mess.
RandomP 19:52, 27 September 2006 (UTC)
I agree with the "My suggestions" of RandomP above. To my opinion everybody should decide for himselve how they compare loans, and savings accounts. People are free to choose the EU formula or the US formula. As a mathematician I recommend the EU formula, by the way.
The problem is that the APR is difficult to compute, especially with the EU formula. We should explain something about how the EU formula is solved. For instance that for equal payment periods the formula is simplified with the geometric sequence formula. There are calculators that solve the EU formula for a number of special cases. For instance equal periods/equal payments, equal periods/equal debt reduction, transaction costs in the beginning, transaction costs in the end, etc.
We have links to calculators that compute the US APR. We should also have some links to calculators that compute the EU APR. I recommend the following two links: Saving money with transaction costs and Compare repayment schemes of a loan
Ruerd 17:59, 18 November 2006 (UTC)
Part of the problem is that this specific terminology ("annual percentage rate") is either a U.S.-specific terminology, or one used with a specific meaning in the U.S. and if used outside the U.S. not necessarily the same specific meaning (it might be a more general meaning, or it might in some cases be a specific but different meaning). Similarly, IIRC the Canadian terminology is "effective annual yield", again with a specific--but different--method of calculation. Looks like annual percentage yield might be another of those terms sometimes used to identify a particular method of calculation. Don't remember the Canadian details, but think it somehow it gets to be twice a half-year rate under a certain method of calculation, something I haven't seen in the articles here.
It probably wouldn't be a bad idea to combine them, but somebody needs to make an effort to both explain this specific-meaning-within-specific-geographical-locations phenomenon and separate out both the location-specific names the various details of the calculations. Gene Nygaard 20:14, 27 September 2006 (UTC)
I've been thinking about this (among other things), and I'm now thinking that the legal term APR (or annual percentage rate, though given the widespread use of the acronym, this might fall under the NATO exception) should have an article, like annual percentage rate (US law). If the legal term is what we're writing about, we should not pretend there is more to it than that.
It's true that legal terminology can, of course, become a form of linguistic prescription (and historically, it usually has been).
I'm not quite sure what you meant, by the way, when you said the mathematical details are most important; IMHO, the most important thing is the general concept, which is expressed most easily mathematically; details of approximating algorithms, such as the various US ones, appear largely irrelevant to me.
RandomP 00:22, 1 October 2006 (UTC)
I hope I have understood the discussion. The term annual percentage rate refers to a method for comparing financial products, such as savings accounts, mortgages and loans. This term refers to a mathematical concept. The problem with the APR is that it is difficult to compute values using the mathematical definition, at least for consumers. So consumers have to trust the values banks and mortgage companies provide for the products they offer. Lawmakers are trying to protect consumers from manipulations in these computed values. They have made rules for what exactly needs to be computed in order to standardize and facilitate easy comparison between the computations of banks and loan providers.
I think that the mathematical concept drives here the legal definitions, not the other way around. A consumer can take a calculator from the internet and make his own comparison between financial products of different providers.
I think we should have one page for Effective_interest_rate explaining the mathematical concept. This page then can then refer to a page with the legal definitions in different countries. This second page should explain the fact that the purpose of the legal definitions is just a way to protect consumers from making the wrong comparisons. The terms "annual percentage rate" (US) and "effective annual yield" (Canada) can be linked to this second page. Furthermore I agree with the remark above that the US definition is not very clear, so we could try to improve the explanation.
Right now "effective interest rate" is linked to Compound_interest, which is something different. So this link should go.
Ruerd 10:23, 19 November 2006 (UTC)
Ruerd 16:55, 20 November 2006 (UTC)
Object to merging the pages based on how users are searching for the terms. Home buyers look for APR as this is what they find quoted by banks. Users would not think to look for the other terms — 68.3.139.57 ( talk • contribs).
Effective interest rate currently redirects here, but doesn't (IMHO) disambiguate well. Effective (annual) interest rate is a pretty well defined term in mathematics of finance (it is any rate converted into the equivalent with annual compounding). APR is - from the discussion here - dependent on what costs are included and the regulatory regime. I would like to undo the redirect to here and have a shorter article there with clear disambiguation. Thoughts/reactions?-- Gregalton 00:19, 8 February 2007 (UTC)
No response, so I'm being bold and assuming there is a massive surge of support for this proposal.-- Gregalton 07:46, 15 March 2007 (UTC)
I've skimmed over the discussions below, and wanted to add this...
I came to this page as a first time home buyer (in the UK); I understood APR was a standardised measure for comparing loans/mortgages etc. What I wanted was to know how it was calculated, and to this degree Wikipedia has failed.
Not only is there no proper details on how to calculate the APR (a couple of poor examples that don't explain themselves are worse than having nothing, IMHO), but there are links only to simple calculators.
In the UK many mortgages have a 'low start period' where the repayment and interest rate for the first, say, 3 years is lower, and then increases afterwards. I wanted to know how the APR was calculated on this, and came away only more confused.
Why can a section not be added on UK/EU and another for US, to show how in most cases the APR is calculated? —Preceding unsigned comment added by 80.6.43.252 ( talk) 21:26, August 29, 2007 (UTC)
But I agree with some of the earlier commentary that this may be because whoever did the calculations didn't completely explain how he did them. I poked around and looked at calculators and did the math from scratch and all of these things lead to the same conclusion, which is that there needs to be a very clear step by step explanation of how one would get an APR calculation, with final results.
I am going to add what I believe is an accurate example and remove the old one. Obviously, feel free to correct me if you think I'm wrong.
Pygmy goat 23:51, 6 September 2007 (UTC)
1. Pygmy: I can't find your example. 2. On this talk page two people are asking how the APR examples in the Wikipedia article were created or how they can be verified. Well, about a year ago I added some of the examples on the Wikipedia APR page. I think I used the following calculator for these examples: Loans: compare different types of repayment schemes. This calculator solves the Netherlands mortgage formula for either S or APR or A_k. I wrote this calculator myself after improving the description and the formulation of the EU formula in the Wikipedia article and adding the Netherlands formula as well. As a mathematician I find the EU formula the best way to define the APR. Some other calculators based on the EU formula are listed on this page.
Ruerd ( talk) 16:26, 13 January 2008 (UTC)
The summation at the bottom of the PMT calculation is meaningless.
The variable of summation is clearly , but it is never used in the expression. I believe the author meant to put -- Yoda of Borg 21:37, 17 September 2007 (UTC)
The article states
"For example, $100,000 mortgaged (without fees, since they add into the calculation in a different way) over 15 years costs a total of $193,429.80 (interest is 93.430% of principal), but over 30 years, costs a total of $315,925.20 (interest is 215.925% of principal)."
While this is a pretty good example, I do feel that the person who wrote this should have included the headline interest rate s/he used to calculate these amounts
Jonewer 20:40, 14 November 2007 (UTC)
I second that, Jonewer. I was just about to say the same thing.
-- 68.253.53.130 ( talk) 21:58, 20 February 2008 (UTC)
The comment(s) below were originally left at Talk:Annual percentage rate/Comments, and are posted here for posterity. Following several discussions in past years, these subpages are now deprecated. The comments may be irrelevant or outdated; if so, please feel free to remove this section.
I have rated this article as a C-class for WikiProject Finance because while it provides a decent amount of information, it still requires more external references and some general clean-up. -- Aka042 ( talk) 01:25, 25 January 2009 (UTC) |
Last edited at 01:25, 25 January 2009 (UTC). Substituted at 14:14, 1 May 2016 (UTC)
This is an ARCHIVE talk-page for: Annual percentage rate.
Notes:
|
Dictionary definition that looks like it was written by someone who doesn't understand what he's defining. - Kenwarren 02:10, Jul 26, 2004 (UTC)
end moved discussion
user:GraemeL and user:Chuck1962 (who is presumably the same as the anon editor user:136.2.1.103) have been repeatedly inserting and deleting the text below. Rather than continuing the revert war, let's discuss the proposed addition here for a while and see if we can work out the objections and concerns. Rossami (talk) 17:43, 8 September 2005 (UTC)
Loan retention assumed to equal loan pay-back period
Another problem with the APR calculation is the assumption that an individual will keep a particular mortgage loan until it is completely paid off resulting in the up-front fixed closing costs being amortized over the full term. The usual pay-back periods are 30 and 15 years but how many people keep the same mortgage that long? Not many, because the odds someone will either refinance or move before the loan is paid off are very high. Computing the APR over the full loan term deflates the apparent cost of the loan, making it harder to decide if it truly makes sense to refinance an existing mortgage. An APR calculator should allow the user to enter a loan retention period or time-in-loan period to more fully gauge the cost of the up-front fixed closing costs.
I would like to thank GraemeL and Rossami for the warm welcome they have given me on my first attempt to contribute content to wikipedia.org! Yes, you were right, I am a spammer of the most monstrous proportions (a realestate agent's website from Ann Arbor, Michigan might make spam fodder out of about 0.045% of your user base!) Hell, I don't even own a bank so where did I get off thinking I could educate others in the arcane world of Annual Percentage Rate calculations! My proposed changes just don't add up to the high standards of the commercial links already on the page that are being given a free pass( http://www.mortgages-loans-calculators.com/calculator-mortgage-apr.asp)! I especially liked the trudging through the instructions from the OCC to download and try their APR calculator. Hell, after about 15 minutes I was actually able to run their bloated, over-engineered product and conclude that it didn't address the issues you so generously censored from my edits!
The comments from GraemeL were particularly fun and just filled me with warm fuzzies. For example, GraemeL claims that my lame website doesn't support non-windows browsers but fails to mention that the APR calculator at www.mortgages-loans-calculators.com assumes a java plug-in that is geared toward Windows IE and may not be readily avaliable on non-Windows browsers (It wouldn't run on my version of Mozilla.) He also claims the good folks at wikipedia.org don't need another APR calculator (GraemeL's non-myopic, penetrating, well researched views are o-so appreciated---I'm sure he's had to spend plenty of time trying to compare different rate and closing cost combinations from different lenders on his mortgages!)
The fact of the matter is that my APR calculator was written with the needs of mortgage borrowers in mind because I personally have run into the problems my calculator seeks to solve. Check it out for yourself, most of the APR calculators on the web are offered by Lenders or Mortgage Brokers; that is, people who are trying to sell you a loan. Furthermore, I have yet to find another APR calculator that lets one select a loan retention period shorter than the loan term. This feature allows one to find out what the pay-back period for the closing costs is or if it makes sense to re-finance an existing mortgage.
I will end by pointing out that the over-all jist of the APR calculation article is to not simply define its most prominent feature, but to place heavy emphasis on the real and serious shortcomings of it from a consumer point of view. The over-all direction of the article is pro-consumer information anyone involved in securing a mortgage will inevitably become caught-up in. My additions most certainly strengthen that direction and would certainly be appreciated by someone looking to either re-finance or purchase a home.
Good evening. I'm sorry that you took my comments as hostile. I actually don't have strong feelings one way or the other about the addition you proposed. I merely would prefer that the dispute be resolved through discussion. On Wikipedia, that generally happens better and more completely when we discuss concerns on the article's Talk page than when we make competing edits to an article. When two editors acting in good faith start repeatedly undoing each others' edits without explanation, we call that a revert war.
I certainly understand your comment about the weaknesses of some of the existing links in the APR article. I may have even been the one who added that link in an early draft of the article. Corrections or improvements are always welcome. We do tend to defer to "impartial" sources because we've had problems in the past with wikispam. The OCC's APR calculator may have lots of shortcomings but no one can accuse them of having an ulterior motive. If you know of a source for a better traditional APR calculator, I for one would encourage you to replace the OCC link.
I also think I understand your comment about the shortcomings of the traditional APR calculation. It's an interesting correction. Can you provide an independent source for your analysis. The difficulty that we run into is that Wikipedia has a strong policy against original research. We've found that to be an essential control in our quest to stay true to our goal - the creation of an encyclopedia. (Note that the proscription against original research is not what many people assume from the name. I encourage you to read the full article.) If this is your personal analysis and original thought, our policy says we can't keep it in the article. On the other hand, if you can provide an independent citation for your analysis, then it is probably appropriate to keep in.
Lastly, I would encourage you to be patient with folks like GraemeL. Wikipedia really does have problems with serious spammers and we depend on folks like him to volunteer to patrol and keep them out. They see so much abuse that sometimes it's hard to remember to assume good faith. When mistakes happen, though, we can generally work them out through discussion. Thanks for your patience. I hope you stay and continue to contribute. Rossami (talk) 04:26, 9 September 2005 (UTC)
a small point: it is a violation of RESPA for a lender to require a borower to use a specific closing agent (attorney or title agent or otherwise) It is a small distinction but technically it is against the law to REQUIRE it. Lenders will usually assume that you are willing to work with their preferred closing agent it is true. Thanks - Ryan -[70.176.77.27 00:14, 7 July 2006]
I'd like to see some more formulas and examples on the main page for this subject. I'd always assumed that APR was what would end up outstanding on a borrowed/lent sum at the end of a year but it seems that what I was thinking of was the "effective annual rate". It appears that if you borrow money at 10% APR, you pay differently if the interest is calculated annually, monthly, or weekly. I am pretty strong mathematically but this all seems a bit odd to me. I think this is something that Wikipedia could really make a strong contribution to clarifying for people. Pictures would be nice :)
I'm putting in a USPOV note. The definition at the beginning of the article, which I do not understand, appears to be using a "monthly interest rate". The example calculation doesn't even give a precise number.
The EU actually gets this one right: the EU definition is what an annualised percentage rate is. It's very simple: if you give $100,000 to a bank that compounds interest continuously at a rate of x% p.a., and you take out a loan of $100,000 with an APR of x at another bank, the (included) payments will cancel out exactly.
That's the gist of it; that the US gets the definition wrong (apparently?) should be a note relegated to a slightly later point.
Details about how APR is criticised because it wasn't made clear enough which payments to include or not to include in its calculation are a relatively minor issue, to be honest. I don't think the article should be giving them quite as much weight.
RandomP 15:00, 26 September 2006 (UTC)
Okay, now let's end this interweaving of comments and try to fix the article. During this discussion, I have convinced myself that our opening example is at best only a very rough approximation under any of the allowed jurisdictions. So:
Short answers:
My suggestion:
The whole subject area on WP is, to be honest, a bit of a mess.
RandomP 19:52, 27 September 2006 (UTC)
I agree with the "My suggestions" of RandomP above. To my opinion everybody should decide for himselve how they compare loans, and savings accounts. People are free to choose the EU formula or the US formula. As a mathematician I recommend the EU formula, by the way.
The problem is that the APR is difficult to compute, especially with the EU formula. We should explain something about how the EU formula is solved. For instance that for equal payment periods the formula is simplified with the geometric sequence formula. There are calculators that solve the EU formula for a number of special cases. For instance equal periods/equal payments, equal periods/equal debt reduction, transaction costs in the beginning, transaction costs in the end, etc.
We have links to calculators that compute the US APR. We should also have some links to calculators that compute the EU APR. I recommend the following two links: Saving money with transaction costs and Compare repayment schemes of a loan
Ruerd 17:59, 18 November 2006 (UTC)
Part of the problem is that this specific terminology ("annual percentage rate") is either a U.S.-specific terminology, or one used with a specific meaning in the U.S. and if used outside the U.S. not necessarily the same specific meaning (it might be a more general meaning, or it might in some cases be a specific but different meaning). Similarly, IIRC the Canadian terminology is "effective annual yield", again with a specific--but different--method of calculation. Looks like annual percentage yield might be another of those terms sometimes used to identify a particular method of calculation. Don't remember the Canadian details, but think it somehow it gets to be twice a half-year rate under a certain method of calculation, something I haven't seen in the articles here.
It probably wouldn't be a bad idea to combine them, but somebody needs to make an effort to both explain this specific-meaning-within-specific-geographical-locations phenomenon and separate out both the location-specific names the various details of the calculations. Gene Nygaard 20:14, 27 September 2006 (UTC)
I've been thinking about this (among other things), and I'm now thinking that the legal term APR (or annual percentage rate, though given the widespread use of the acronym, this might fall under the NATO exception) should have an article, like annual percentage rate (US law). If the legal term is what we're writing about, we should not pretend there is more to it than that.
It's true that legal terminology can, of course, become a form of linguistic prescription (and historically, it usually has been).
I'm not quite sure what you meant, by the way, when you said the mathematical details are most important; IMHO, the most important thing is the general concept, which is expressed most easily mathematically; details of approximating algorithms, such as the various US ones, appear largely irrelevant to me.
RandomP 00:22, 1 October 2006 (UTC)
I hope I have understood the discussion. The term annual percentage rate refers to a method for comparing financial products, such as savings accounts, mortgages and loans. This term refers to a mathematical concept. The problem with the APR is that it is difficult to compute values using the mathematical definition, at least for consumers. So consumers have to trust the values banks and mortgage companies provide for the products they offer. Lawmakers are trying to protect consumers from manipulations in these computed values. They have made rules for what exactly needs to be computed in order to standardize and facilitate easy comparison between the computations of banks and loan providers.
I think that the mathematical concept drives here the legal definitions, not the other way around. A consumer can take a calculator from the internet and make his own comparison between financial products of different providers.
I think we should have one page for Effective_interest_rate explaining the mathematical concept. This page then can then refer to a page with the legal definitions in different countries. This second page should explain the fact that the purpose of the legal definitions is just a way to protect consumers from making the wrong comparisons. The terms "annual percentage rate" (US) and "effective annual yield" (Canada) can be linked to this second page. Furthermore I agree with the remark above that the US definition is not very clear, so we could try to improve the explanation.
Right now "effective interest rate" is linked to Compound_interest, which is something different. So this link should go.
Ruerd 10:23, 19 November 2006 (UTC)
Ruerd 16:55, 20 November 2006 (UTC)
Object to merging the pages based on how users are searching for the terms. Home buyers look for APR as this is what they find quoted by banks. Users would not think to look for the other terms — 68.3.139.57 ( talk • contribs).
Effective interest rate currently redirects here, but doesn't (IMHO) disambiguate well. Effective (annual) interest rate is a pretty well defined term in mathematics of finance (it is any rate converted into the equivalent with annual compounding). APR is - from the discussion here - dependent on what costs are included and the regulatory regime. I would like to undo the redirect to here and have a shorter article there with clear disambiguation. Thoughts/reactions?-- Gregalton 00:19, 8 February 2007 (UTC)
No response, so I'm being bold and assuming there is a massive surge of support for this proposal.-- Gregalton 07:46, 15 March 2007 (UTC)
I've skimmed over the discussions below, and wanted to add this...
I came to this page as a first time home buyer (in the UK); I understood APR was a standardised measure for comparing loans/mortgages etc. What I wanted was to know how it was calculated, and to this degree Wikipedia has failed.
Not only is there no proper details on how to calculate the APR (a couple of poor examples that don't explain themselves are worse than having nothing, IMHO), but there are links only to simple calculators.
In the UK many mortgages have a 'low start period' where the repayment and interest rate for the first, say, 3 years is lower, and then increases afterwards. I wanted to know how the APR was calculated on this, and came away only more confused.
Why can a section not be added on UK/EU and another for US, to show how in most cases the APR is calculated? —Preceding unsigned comment added by 80.6.43.252 ( talk) 21:26, August 29, 2007 (UTC)
But I agree with some of the earlier commentary that this may be because whoever did the calculations didn't completely explain how he did them. I poked around and looked at calculators and did the math from scratch and all of these things lead to the same conclusion, which is that there needs to be a very clear step by step explanation of how one would get an APR calculation, with final results.
I am going to add what I believe is an accurate example and remove the old one. Obviously, feel free to correct me if you think I'm wrong.
Pygmy goat 23:51, 6 September 2007 (UTC)
1. Pygmy: I can't find your example. 2. On this talk page two people are asking how the APR examples in the Wikipedia article were created or how they can be verified. Well, about a year ago I added some of the examples on the Wikipedia APR page. I think I used the following calculator for these examples: Loans: compare different types of repayment schemes. This calculator solves the Netherlands mortgage formula for either S or APR or A_k. I wrote this calculator myself after improving the description and the formulation of the EU formula in the Wikipedia article and adding the Netherlands formula as well. As a mathematician I find the EU formula the best way to define the APR. Some other calculators based on the EU formula are listed on this page.
Ruerd ( talk) 16:26, 13 January 2008 (UTC)
The summation at the bottom of the PMT calculation is meaningless.
The variable of summation is clearly , but it is never used in the expression. I believe the author meant to put -- Yoda of Borg 21:37, 17 September 2007 (UTC)
The article states
"For example, $100,000 mortgaged (without fees, since they add into the calculation in a different way) over 15 years costs a total of $193,429.80 (interest is 93.430% of principal), but over 30 years, costs a total of $315,925.20 (interest is 215.925% of principal)."
While this is a pretty good example, I do feel that the person who wrote this should have included the headline interest rate s/he used to calculate these amounts
Jonewer 20:40, 14 November 2007 (UTC)
I second that, Jonewer. I was just about to say the same thing.
-- 68.253.53.130 ( talk) 21:58, 20 February 2008 (UTC)
The comment(s) below were originally left at Talk:Annual percentage rate/Comments, and are posted here for posterity. Following several discussions in past years, these subpages are now deprecated. The comments may be irrelevant or outdated; if so, please feel free to remove this section.
I have rated this article as a C-class for WikiProject Finance because while it provides a decent amount of information, it still requires more external references and some general clean-up. -- Aka042 ( talk) 01:25, 25 January 2009 (UTC) |
Last edited at 01:25, 25 January 2009 (UTC). Substituted at 14:14, 1 May 2016 (UTC)