For Individual Clients

Calculation of auto loan interest rates

Attention! Loan interest is calculated at the nominal interest rate. The latter shows the annual interest accrued to the outstanding loan principle. The actual annual percentage rate (APR) shows the cost of the loan in case of due and timely repayments under the agreement.

 

The amount of interest depends on the annual nominal interest rate and method of loan repayment.

 

The loan may be repaid by one of the methods below:

  • Differentiated/repayment of principal in equal portions in which case monthly payments consist of equal principal amounts and varying interest. As a result of reducing the interest, the amount of your monthly payments decreases each month.
  • Annuity/fixed monthly installments, where the monthly payment throughout the repayment period remains the same and consists of a portion of loan and a portion of interest.
  • Mixed: the client may choose an individual repayment schedule based on the seasonality of cash flows, provided that the amount of principal repaid each year makes at least 5% of contractual amount in case of loans for purchase/renovation/construction of residential and commercial property and investment loans.

If you choose to repay the loan by the 2nd method, the total amount of payable interest will be higher than in the 1st case. 
The 2nd method, however, allows you planning your expenses, because you know the exact amount you’re going to pay each month.

 

If you repay your loan by differentiated method, the amount of monthly payment shall be calculated according to the following formula:

 

R = m / n + m * r % / 365 * o, where 

R             is your monthly payment

m            is the loan principal

n              is the loan term expressed in months

r               is the annual interest rate

օ              is the number of days in one month

 

 

If you repay your loan by annuity, the amount of monthly payment shall be calculated by the following formula:


R = P x r / (1 – 1/(1 + r) n), where


R             is your monthly payment

P              is the loan amount

n              is total number of loan repayments throughout the whole loan term (number of months)

r               is a monthly interest rate which is equal to 1/12 of the annual interest rate specified in the loan agreement at the moment of loan disbursement  

The amount of monthly payments is rounded to one decimal place.



The outstanding loan is calculated according to the following formula:

 
Pt = R x ((1 – 1/(1 + r) n) / r, where

  

Pt            is the actual loan outstanding by the end of the term

R             is your monthly repayment

t               is the number of repayments due by the end of the loan term (number of months)

r               is a monthly interest rate which is equal to 1/12 of the annual interest rate specified in the loan agreement at the moment of loan disbursement

 

 

Annual percentage rate may be calculated out of the following formula: 

where
i               is the annual percentage rate (APR)

A             is the loan principal (the amount initially provided by the lender to the borrower)

n              is the sequence number of loan payment

N             is the sequence number of the last payment

Kn           is the amount of nth payment under the loan

Dn           is the number of days from the day of loan disbursement up to the day of the nth payment

 

The annual percentage rate “i” may be calculated, if the other data of the equation are available from the loan agreement or another source.

 

Annual percentage rate is defined on the basis of its constituent conditions, is provisional and may change throughout the validity term of the agreement depending on the early repayment of the loan by the borrower and changes in constituents.  

 

 

APR calculation example

 

1. Car loan

  1. Loan principal: AMD 5,000,000
  2. Nominal interest rate: 16% accrued to the outstanding decreasing loan principal
  3. Term: 5 years (1,825 days)
  4. Repayment: equal monthly payments (loan principal and interest)
  5. Other payments to be made by the borrower

*       Car appraisal fee (lumpsum): AMD 10,000

*       Notary’s fee: AMD 16,000

*       Lumpsum fee for a statement from the Police: AMD 5,000

*       Loan disbursement fee (lumpsum, 0.5% or AMD 50,000, whichever is greater): AMD 50,000

*       Annual insurance fee: 2.5% of the outstanding loan, where the first payment (5,000,000 * 2.5%=125,000 AMD) should be made prior to the loan disbursement; the 2nd year fee is AMD 107,260; the 3rd year fee is AMD 86,460; the 4th year fee is AMD 62,080 and the 5th year fee is AMD 33,500.

2. Hence N=65, including 1 payment at the moment of provision of the loan, 4 payments of annual insurance fees and 60 payments of the loan and interest.

 

 3. Based on the terms specified in paragraph 1, the loan repayment schedule is as follows:

 

Sequence of payments: n

Number of days between loan disbursement to each payment: Dn

Other payments

Interest payable

Principal payable

Total amount of each repayment: Kn

1

0

206,000.00

 

 

206,000.00

2

30

 

66,666.67

54923.62

121,590.29

3

61

 

65,934.35

55655.93

121,590.29

4

92

 

65,192.27

56398.01

121,590.29

5

120

 

64,440.30

57149.99

121,590.29

6

151

 

63,678.30

57911.99

121,590.29

7

181

 

62,906.14

58684.15

121,590.29

8

212

 

62,123.68

59466.60

121,590.29

9

242

 

61,330.80

60259.49

121,590.29

10

273

 

60,527.34

61062.95

121,590.29

11

304

 

59,713.16

61877.12

121,590.29

12

334

 

58,888.14

62702.15

121,590.29

13

365

 

58,052.11

63538.18

121,590.29

14

366

107,260.00

 

 

107,260.00

15

395

 

57,204.93

64385.35

121,590.29

16

426

 

56,346.46

65243.83

121,590.29

17

457

 

55,476.54

66113.74

121,590.29

18

485

 

54,595.03

66995.26

121,590.29

19

516

 

53,701.76

67888.53

121,590.29

20

546

 

52,796.57

68793.71

121,590.29

21

577

 

51,879.33

69710.96

121,590.29

22

607

 

50,949.85

70640.44

121,590.29

23

638

 

50,007.97

71582.31

121,590.29

24

669

 

49,053.54

72536.74

121,590.29

25

699

 

48,086.39

73503.90

121,590.29

26

730

 

47,106.33

74483.95

121,590.29

27

731

86,460.00

 

 

86,460.00

28

760

 

46,113.21

75477.07

121,590.29

29

791

 

45,106.85

76483.43

121,590.29

30

822

 

44,087.07

77503.21

121,590.29

31

850

 

43,053.70

78536.59

121,590.29

32

881

 

42,006.54

79583.74

121,590.29

33

911

 

40,945.43

80644.86

121,590.29

34

942

 

39,870.16

81720.12

121,590.29

35

972

 

38,780.56

82809.72

121,590.29

36

1003

 

37,676.43

83913.85

121,590.29

37

1034

 

36,557.58

85032.71

121,590.29

38

1064

 

35,423.81

86166.48

121,590.29

39

1095

 

34,274.92

87315.36

121,590.29

40

1096

62,080.00

 

 

62,080.00

41

1125

 

33,110.72

88479.57

121,590.29

42

1156

 

31,930.99

89659.29

121,590.29

43

1187

 

30,735.53

90854.75

121,590.29

44

1215

 

29,524.14

92066.15

121,590.29

45

1246

 

28,296.59

93293.70

121,590.29

46

1276

 

27,052.67

94537.61

121,590.29

47

1307

 

25,792.17

95798.11

121,590.29

48

1337

 

24,514.86

97075.42

121,590.29

49

1368

 

23,220.52

98369.76

121,590.29

50

1399

 

21,908.93

99681.36

121,590.29

51

1429

 

20,579.84

101010.44

121,590.29

52

1460

 

19,233.04

102357.25

121,590.29

53

1461

33,500.00

 

 

33,500.00

54

1490

 

17,868.27

103722.01

121,590.29

55

1521

 

16,485.31

105104.97

121,590.29

56

1552

 

15,083.91

106506.37

121,590.29

57

1580

 

13,663.83

107926.46

121,590.29

58

1611

 

12,224.81

109365.48

121,590.29

59

1641

 

10,766.60

110823.68

121,590.29

60

1672

 

9,288.95

112301.33

121,590.29

61

1702

 

7,791.60

113798.68

121,590.29

62

1733

 

6,274.29

115316.00

121,590.29

63

1764

 

4,736.74

116853.54

121,590.29

64

1794

 

3,178.69

118411.59

121,590.29

65

1825

 

1,599.87

119990.41

121,590.29

Total

 

495,300.00

2,295,417.09

 5,000,000.00

 7,790,717.09

 

 4. Other payments due at the moment of the loan disbursement (K1) are equal to:  

 

K1=10,000+16,000+5,000+50,000+125,000=206,000

 

5. With all inputs available it is possible to calculate the APR using the formula defined by the law of the Republic of Armenia "On Consumer Crediting".

 

5,000,000=

 

 +

 

 +

 

 +

 

...+

 

206,000

121,590.29

121,590.29

121,590.29

121,590.29

 

 0 
365

 

 30 
365

 

 61 
365

 

92
365

 

1,825
365

 

(1+i) 

 

  

 (1+i)

 

 

(1+i) 

 

 

(1+i) 

 

 

(1+i) 

 

, where

 

5,000,000-206,000=

 

 +

 

 +

 

 +...+

 

121,590.29

121,590.29

121,590.29

121,590.29

 

 30 
365

 

 61 
365

 

 92 
365

 

 1,825 
365

 

(1+i) 

 

 

(1+i) 

 

 

(1+i) 

 

 

(1+i) 

 

 

 

whence

 i=0.218499*100=21.85%

 Thus, actual percentage rate is 21.85 %.

  

 APR Calculation: Representative Example

  1. Loan facility: loan for purchase of a car from secondary market  
  2. Principal loan amount: AMD 7,000,000
  3. Annual interest rate: 18.5%
  4. Term: 60 months
  5. Repayment method: differentiated (the loan principal is repaid in equal portions, the interest is accrued to outstanding balance and decreases with each payment)
  6. Loan disbursement lumpsum fee: AMD 50,000
  7. Insurance fee: 2.5% of the outstanding loan principal every year
  8. Car appraisal fee: AMD 10,000
  9. Fee for the Police reference on absence of encumbrance on the vehicle: AMD 3,300
  10. Pledge agreement notarization fee: AMD 24,000
  11. Fee for state registration of security interest: AMD 2,200
  12. Start day: 01/07/2013
  13. First payment day: 01/08/2013

Annual percentage rate: 24.96%

 Interest Calculation. Representative Example.

Principal loan amount: AMD 7,000,000
Annual interest rate: 15%
Loan term: 60 months
Monthly payment in case of repayment by annuity will make AMD 166,529.5.
Daily interest will make 7,000,000*15/100/365=2,876.7 AMD.


Updated 10.01.2017, 10:55

Services for Individuals

  
HEAD OFFICE

2 Vazgen Sargsyan Street, Yerevan 0010,RA

Tel.: +37410 56 11 11

Fax: +37410 51 31 33

USA:

+1 888 802 5352

UK:

+448000903191

Dear visitor,
If you find any discrepancies in the website materials in Armenian, English and Russian languages, or incomplete materials in Russian and English languages, please consider Armenian version as prevailing.
 
Ameriabank CJSC does not bear any responsibility for the inaccuracy of information on the linked web sites, nor does it accept any responsibility for the advertisements therein or possible consequences arising out of use of information provided on the linked web-sites by the third parties.
© 2007-2017. All rights reserved.