I'm always paying, never make it, but you can't look back

[venta]

So, sums. I can, broadly speaking, do sums. I have a degree in maths.

However, interest rate calculations have always baffled me. Sure, if you ask me to calculate 3 months compound interest at a monthly rate of x% I know what to do. However, when it comes to real examples of mortgages and credit cards, I can't work out what the sum I need to do is. I'm still slightly baffled about the interest charged me when I was a day late paying my credit card off in full in March.

Today, the BBC carried a story about a loanshark. It includes the following statement about someone who borrowed £1000:

"...to pay £49 a week over 60 weeks, making the total amount he had to
repay £2,940 at 917% APR."

Now, if we approximate 60 weeks to a year, then surely that's an annual interest rate of no more than 294%. The quoted APR isn't even in vaguely the right ballpark.

So... have I completely failed to understand APR ? (Wikipedia's page on the subject didn't really help with the definition.) Or is the BBC publishing unmitigated wank in the name of investigative journalism ?

Edit It turns out I'd failed to understand APR, and the BBC is cleared in this instance.

Comments

[venta.livejournal.com]

They were intended to be orthogonal :) My mental arithmetic is reasonable, and I claim to have enough mathematical ability to work out what to add up in the first place...

However, I'm considering rescinding the latter statement. In working through formulae above, I've been alarmed at how little I seem to remember about maipulating indices and logs these days. Hopefully I can claim that that's just knowledge, and easily look-upable, and therefore doesn't count.

[feanelwa.livejournal.com]

It's like French, it comes back when you need it.

[venta.livejournal.com]

Oh, crap. My French completely fails to come back when I need it!

Although I suspect you're broadly correct, and the problem is just that summation of geometric series or any form of differentiation don't feature in my life much at present.

[feanelwa.livejournal.com]

It takes about a day of fail before it comes right IME.