A New Way of Looking at Interest- 1st successful Claim - N'wide

[Mindzai]

cool

[Glenn UK]

Hmmmm

Now I appear to be in a position, having downloaded the compounding interest sheet i find i have claimed for only around two thirds of the total cliam value i could have and ive sent the LBA off.

two choices i guess, swallow the 30% loss or re start the claim.

Oh what to do!!


GLenn

[Mindzai]

A word of advice if you are referring to my sheet is double check it against the latest version (1.2, in my sig) just to be sure, I've had a few tips on the correct decimal precision and other things to give more accurate results. There really shouldn't be a 30% difference over Vamps sheets I wouldn't have thought. Unless you mean you did your calcs manually before and didnt compound?

btw I found my claim increased by £80ish but then most of my charges were in the last year or two so it didnt make much diference. Even so I intend to file for the full amount in my claim.

[Glenn UK]

Originally Posted by Mindzai

A word of advice if you are referring to my sheet is double check it against the latest version (1.2, in my sig) just to be sure, I've had a few tips on the correct decimal precision and other things to give more accurate results. There really shouldn't be a 30% difference over Vamps sheets I wouldn't have thought. Unless you mean you did your calcs manually before and didnt compound?

btw I found my claim increased by £80ish but then most of my charges were in the last year or two so it didnt make much diference. Even so I intend to file for the full amount in my claim.

Thanks mindzai

MY claim goes back to early 97, so the time period and method of calculation make a huge difference to me.

Hence the big difference between your sheet and vamps.

I cut and paste all my charge and interest charged from the original sheet into yours. Had toulock the sheet to copy the formula to cover all my charges. the total charges is the same so it can only be due to the wat the original sheet cals the interest.

Glenn

[Mindzai]

Hi Glen, when you say you had to copy the formula over, what do you mean? You shouldn't have to change anything other than the unlocked cells, unless I'm misunderstanding you?

EDIT: oh i think I understand - you mean there weren't enough rows for all your charges? Wow they must owe you alot!!

[Glenn UK]

Mindzai

I have a total of around 240 seperate charges including those credited back to my account, hence the need to drag the forumal to more cells.

Anyway I am trhinking about where to go now with respect to the claim.

Glenn

Edit They do ow me a reasonable sum, but adding the interest, even using Vamps spreadsheet increases it dramatically, using you sheet it increase more than 4 times the original debt they owe.

[barracad]

Hi Mindzai

If somebody uses your spreadsheet to calculate 8% interest alone, does this work it out as a simple 8% or compound 8%?

The reason being that s69 allows you to claim simple 8% only. So if somebody adds to their claim contractual interest at XXXX or in the alternative s69 interest at YYYY would they get the simple 8% figure from your sheet, or would they need to use one of the other spreadsheets to work this out?

[Mindzai]

Hi barracad. I'm actually adding a tab right now for 8% interest under s69 which doesn't compound. At the moment it is only really suitable for contractual interest (that's what it was created for), but this will be changed by tonight.

[meagain]

Originally Posted by Mindzai

15*(1+0.00045820883324)^2 192 = 40.94

... which is the correct answer.

If I round off the daily rate to 4 decomal places, I get a close figure:

15*(1+0.0005)^2192 = 44.87

... which is incorrect, and actually gives you an annual rate of 20% instead of 18.2%. 0.05% daily is 20% annual, 0.04% is 15.7% annual.

If you must insist on rounding (though I see no reason to do so other than to inflate your claim - forcing the rounding is extra work for Excel), try to 5 or 6 places. Case-in-point: 0.046% gives 18.27% annual, 0.045% gives 17.8%. An error of up to 3%pa might be acceptable for a napkin calculation, but you might not get away with presenting such a figure in court - in particular, if your bank is feeling particularly vindictive, they can (quite rightly) challenge the figure.

[Mindzai]

Originally Posted by meagain

... which is the correct answer.



... which is incorrect, and actually gives you an annual rate of 20% instead of 18.2%. 0.0005% daily is 20% annual, 0.0004% is 15.7% annual.

If you must insist on rounding (though I see no reason to do so other than to inflate your claim - forcing the rounding is extra work for Excel), try to 5 or 6 places. Case-in-point: 0.00046% gives 18.27% annual, 0.00045% gives 17.8%. An error of up to 3%pa might be acceptable for a napkin calculation, but you might not get away with presenting such a figure in court - in particular, if your bank is feeling particularly vindictive, they can (quite rightly) challenge the figure.

I have changed the sheet to remove rounding after coming to the same conclusion, however if you were to work the interest out with a calculator and pen you would not be working to the same precision as Excel. I seriously doubt the Judge would penalise someone who had not used a spreadsheet and thus had inadvertantly inflated their claim. My intention with the rounding was to reproduce similar results to someone using a calculator, but then I suppose that partly defeats the point of using a spreadsheet, which is why i removed rounding.

[meagain]

Makes sense. If you have a calculator that can do the calculations like that with any good degree of accuracy, you spent far too much money on your calculator

(Cue jokes about the £500 combined calculator and desk calendar sat on/under the desk ...)

[pelham9]

I am puzzled by some of the statements on this thread and I am worried that some of the calculations are incorrect.

It has been said that cheap calculaters do not have the precision to do the compound interest calculations

Any scientific calculator which nowadays can be bought for less than £20 can do these calculations to the required degree of accuracy. The maths chips used in modern computers which the Excel spreadsheet ineviatably uses are very cheap and all scietific calculators have the same or equivalent chips.

I have seen this statement 0.05%= .0005. It is true that the fraction .0005 is a mathematical eqivalent to .05% but it is very important that the % notation is correctly used otherwise there can be muddle.

It can easily lead to the nonsense that 0.05% is equal to .0005% which is obviously wrong. In all calculations of compound interest the period interest should be expressed as 1+ rate/100. Thus for 0.05% the period interest is
1+0.05/100=1+.0005. If this is done the error that the rate is 0.0005% will never be made.

For instance a) b) and c) below have all appeared in this thread.

a) 0.00045% per day compounded daily gives 17.8% annually
b) 0.00046% per day compounded daily gives 18.27% annually.
c) 0.00047% per day compounded daily gives 18.7% annually.
the correct answers are
a) 0.16438....%
b) 0.16804....%
c) 0.17169....%

Now if a)0.045% b)0.046% c)0.047% had beeen the rates used which I am sure was what is meant the results given would have been correct. Note that not only are the results different by a factor of 100 but the actual figures are significantly different.

There is one other problem. you appear to eqate the %APR (pedantically this is the correct term) with tha annual rate charged. I have not yet seen a lender who actually charges the %APR as an annual rate. This is because the %APR
is the annual rate rounded to one decimal place. so 16.438%annual =16.4%APR.

The banks get there by a roundabout root. They decide what a competitive %APR is say 15.9%APR. They then add up to .049999... to this %APR. to get an annual rate =15.949% (which is what they actually charge) and work out a monthly rate by the compound (route) method. This is then conveniently rounded often to as many as 3 decimal places so that the resultant monthly rate will give the desired %APR. SO the actual rate of 15.94....% has magically transformed in the minds of the majority of cistomers to an annual rate of 15.9%. This matters paricularly if you are taking ^365 or worse ^2190 to arrive at your answers.

[Mindzai]

Originally Posted by Glenn UK

Mindzai

I have a total of around 240 seperate charges including those credited back to my account, hence the need to drag the forumal to more cells.

Anyway I am trhinking about where to go now with respect to the claim.

Glenn

Edit They do ow me a reasonable sum, but adding the interest, even using Vamps spreadsheet increases it dramatically, using you sheet it increase more than 4 times the original debt they owe.

Hi Glen,

Ive had a real proper look at vamp's original sheet tonight and it doesn't actually compount interest, it just adds simple interest, which explains the large increase you're seeing.

[Mindzai]

Originally Posted by pelham9

I am puzzled by some of the statements on this thread and I am worried that some of the calculations are incorrect.

It has been said that cheap calculaters do not have the precision to do the compound interest calculations

Any scientific calculator which nowadays can be bought for less than £20 can do these calculations to the required degree of accuracy. The maths chips used in modern computers which the Excel spreadsheet ineviatably uses are very cheap and all scietific calculators have the same or equivalent chips.

I have seen this statement 0.05%= .0005. It is true that the fraction .0005 is a mathematical eqivalent to .05% but it is very important that the % notation is correctly used otherwise there can be muddle.

It can easily lead to the nonsense that 0.05% is equal to .0005% which is obviously wrong. In all calculations of compound interest the period interest should be expressed as 1+ rate/100. Thus for 0.05% the period interest is
1+0.05/100=1+.0005. If this is done the error that the rate is 0.0005% will never be made.

For instance a) b) and c) below have all appeared in this thread.

a) 0.00045% per day compounded daily gives 17.8% annually
b) 0.00046% per day compounded daily gives 18.27% annually.
c) 0.00047% per day compounded daily gives 18.7% annually.
the correct answers are
a) 0.16438....%
b) 0.16804....%
c) 0.17169....%

Now if a)0.045% b)0.046% c)0.047% had beeen the rates used which I am sure was what is meant the results given would have been correct. Note that not only are the results different by a factor of 100 but the actual figures are significantly different.

There is one other problem. you appear to eqate the %APR (pedantically this is the correct term) with tha annual rate charged. I have not yet seen a lender who actually charges the %APR as an annual rate. This is because the %APR
is the annual rate rounded to one decimal place. so 16.438%annual =16.4%APR.

The banks get there by a roundabout root. They decide what a competitive %APR is say 15.9%APR. They then add up to .049999... to this %APR. to get an annual rate =15.949% (which is what they actually charge) and work out a monthly rate by the compound (route) method. This is then conveniently rounded often to as many as 3 decimal places so that the resultant monthly rate will give the desired %APR. SO the actual rate of 15.94....% has magically transformed in the minds of the majority of cistomers to an annual rate of 15.9%. This matters paricularly if you are taking ^365 or worse ^2190 to arrive at your answers.

Hi pelham, very helpful, thanks.

[Mindzai]

I've updated the sheet to include a tab for statutory interest, as well as written some more comprehensive notes. If you're using an older version you may want to redownload and use this one instead.

Link is in my sig.

EDIT: caro if you read this i tried to reply to your PM but your box is full. If you still want