How to work out the total interest paid?

[TheMagicPirate]

I'm trying to work out the interest rate that I will pay on my car finance.

I thought it was "Total amount" - "Amount Borrowed" = "Difference"
e.g £100 - £80 = £20
Then
("Difference"" / Amount Borrowed") * 100 = % of Interest Paid
( 20 / 80 ) *100 = 25%


But when i do that with my figures its seems i'm paying 33% interest.

Is this my bad sums or not?

Thanks

 

[Stringy]

I'm trying to work out the interest rate that I will pay on my car finance.

I thought it was "Total amount" - "Amount Borrowed" = "Difference"
e.g £100 - £80 = £20
Then
("Difference"" / Amount Borrowed") * 100 = % of Interest Paid
( 20 / 80 ) *100 = 25%


But when i do that with my figures its seems i'm paying 33% interest.

Is this my bad sums or not?

Thanks

It would depend on how long it's been since you borrowed it.

Knowing how long it's been, how much you borrowed, and the supposed rate of interest, you can work out how much extra you owe at the given time.

e.g.
Time = 2 years
Amount borrowed = 100
Interest= = 25%

Total owed = Amount Borrowed * (Interest ^ Time)

100 * 1.25^2 = 156.25

100 owed would become 156.25 over the 2 years.

 

[Six6siX]

With most loans I think they are calculated using compound interest. Ie the interest is calculated monthly, usually, given the balance remaining.

My understanding is...

If you have a loan of £100 and pay back £10 a month and the interest is £5% compounded monthly you would have:

1: £100
2: (0.05*90)+(90) = £94.50
3: (0.05*84.50)+(84.50) = £88.725

etc..

I know thats in the opposite direction that you want to go, but if you do it reverse you should theoretically be able to find out the rate of interest.

At least thats how I understand it (I may be talking out of my rear end, so feel free to correct me )

 

[me227]

Just call up and ask them for a settlement figure.