The Link > FAQs
Credit calculator programs (c) Brian Stewart, 1983-2004
Frequently Asked Questions
Most of the questions addressed to this site are of the 'Can I have the programs?' type, so some of these are made up or based on the sorts of questions I have had in the past ... but hopefully they are illustrative:
Q's and A's
Q. How do I use the programs on a loan where ... ?
A. Woah there ... sorry chum, but the answer to that is in the documentation somewhere, you need to read it. I will only deal with enquiries where I know the answer isn't already in the material provided. If I'm feeling really generous, I might point you to the right file.
Q. Yes, but how do I ... ?
Q. How do I install the programs?
A. Installation details are accessed by going to the downloads page and then clicking on the 'Installing' link in the menu or at the bottom of the page.
Q. I've heard you've developed a proper Windows version of the programs?
A. What do you mean 'proper', is DOS improper? Well ... I have played around with a general Windows patch using Richard Russell's BBC BASIC for Windows, but that's a long way from a proper Windows program. I have written a program for the Office of Fair Trading but you should contact them about it.
Q. Is this answer right? My APR looks much too high!
A. Ah, you'll be a lender then ... borrowers tend to think the answer's too low. Well, maybe it's not right, if you haven't used the programs the right way they'll give you the wrong answer - you need to read the instructions ... carefully. On the other hand, APR isn't particularly intuitive (it's difficult to just guess what the answer will be - which is why a computer program is needed) or the loan might just be a much worse deal than you thought it was. All I can tell you is that I've done everything I can to ensure that, if you put in the right information, the right answer comes out the other end.
Q. Why does the damn thing keep beeping at me?
A. Because you're doing something wrong. Typical examples are:
What you need to do (and I think I'm developing a theme here) is read the documentation carefully. Alternatively, switch your speakers off.
Q. Why don't the APR programs put a '%' sign after the APR?
A. Because that's what the 'P' in 'APR' stands for. Putting a '%' as well would be a tautology. If you want a '%' sign, I'll have to take the 'P' ... out.
Q. My settlement figure worked out to be more than what I originally borrowed! That can't be right, is there something wrong with your program?
A. Probably not. Unfortunately, this can happen, generally speaking, where the charges under your loan are more than the amount borrowed. In these cases the statutory 'Rule of 78' used to calculate the settlement figure doesn't work very well and the settlement figure can go up from payment to payment during the early part of the loan, rather than, as you might reasonably expect, going down. The new 2004 Early Settlement Regulations came into operation in June 2005 and will progressively apply to loans as time goes on. They use the fairer Acruarial Rule and will largely resolve this.
The Multi-calculator or Schedule programs on the resources page can be used to calculate an 'actuarial' settlement figure, which means that you end up paying the same APR regardless of when you settle. Put the loan and repayment details into the Multi-calculator and calculate the APR. Then adjust the number of repayments to the time you want to settle and calculate the 'tail-end repayment', this is the actuarial settlement figure. Currently of course, the lender is only required to give you the statutory 'Rule of 78' figure. There may however also be a month's interest to pay on top.
Q. "According to your program my APR is 164.2. This is absolute nonsense - any schoolboy knows that you can't have more than 100% of anything!" - honest, someone really did write that to me once.
A. I wrote back and asked him how he would express £164.20 as a percentage of £100. He didn't reply ... perhaps he asked a schoolboy.
Q. Can the programs deal with the rebate calculation for a loan where interest is charged on the daily/monthly balance, the interest rate has changed several times, and the customer has fallen into arrears and incurred additional charges or made extra or irregular repayments?
A. That's tough one. You should be able to do it using the package (at least with the Plus or Two versions) and you need to read through the stuff in REBPLUS.DOC or REBATES2.DOC about 'Default Cases' (see the next question) and you will probably find the Schedule Builder program, available from the resources page, helpful if you can get to grips with it ... however, it's often difficult to get hold of all the information about the loan and repayments you need and, if you're not the lender, you won't know exactly how their charging systems work, so dealing with cases like this is never easy.  You may find that the best you can do is estimate the settlement figure or bracket it with some best/worst case assumptions.
Q. You keep telling me to look for answers in the documentation, how can I find anything in there?
A. Two ways: first, the package provides its own search facility, and here's what you do...
The second 'DIY' method it to build your own 'database' to search through. All I mean by this is you could, for example, load all the .DOC files from the package one after the other into a single file in your wordprocessor (using it's 'insert text' or whatever function) and then save it somewhere safe. Then, when you want to look for something, you can search through the whole lot using the wordprocessor's 'find' facility.
Q. I searched the web and found a lot of other APR calculator programs, are they the same as yours?
A. Not sure. What I can tell you is, if you do this sort of search, the vast majority of hits you come up with are likely to be from America and no good for our UK or European legislation.
For example, I did a search and one hit I came up with said something like 'DOS APR Calculator' - which sounded very much like what's available here. So I downloaded it, and it was from the US 'Office of the Comptroller of the Currency' (OCC) and dealt with calculations under Regulation Z (that's 'Regulation Zee', roughly the USA equivalent of the UK TCC Regs).
I did a simple APR calculation: a loan of £/$100 is repaid by twelve equal monthy instalments of £/$10. This is the result screen from the OCC program:
... then I did the same calculation using one of the Credit Programs with this result:
35% and 41.3 is quite a difference. There's nothing wrong with either result (apart from the '%' sign after the OCC result) but Regulation Z doesn't take account of the compounding of interest and gives lower results (note that the UK program also gives the American result as a 'nominal' rather than an 'effective' rate). So, the moral of the story is: make sure that other programs are using the correct method. If you find another program you would rather use, perhaps because it's a 'proper' Windows program, you can use the programs here to check the method being used.
Q. Yeah, but I've found a program which gives a higher answer than yours ... how'd that happen?
A. Not sure really ... one possibility is that the program you've got is using 'continuous compounding'. The statutory APR method assumes that interest compounds at whatever frequency the agreement dictates (usually the intervals at which repayments are to be made). Some, to be honest, to me rather academic and theoretical approches to rate calculation, assume that interest compounds continuously - ie at infinitely small intervals. The more often interest componds the higher the resulting effective annual rate so this will come up with a higher annual rate than the APR. Incidentally, you might assume that continuous compounding would result in an infinite rate, but it doesn't, for reasons I won't go into here - if you want to know more, try tapping 'continuous compounding' into a search engine.