Create a new Record with “File” and “New Record.”

“Add-on interest” is a calculation that Margill Loan Manager (MLM) handles easily to compute the true interest rate (APR).

For example, a car dealer advertises a rate of $12.50 per $100 per year on a $20,000 loan to be repaid in monthly payments over 4 years. (*While this example is in dollars, Margill can calculate interest in any currency.)

How much interest is payable? What is the interest rate (or APR) on this loan?

APR window

This will give us a total add-on of $10,000 in interest: $20,000/100 X $12.50 X 4. This $10,000 is added in the APR window.

Data window

The total loan is thus $30,000 to be repaid in 48 equal payments at “0.00%” interest. The compounding period is not important since for reimbursement, the interest rate is 0.00%.

Once the data is entered, press “Compute.” The payment will be calculated by MLM ($625 per month) and the detailed payment schedule produced:

To obtain the APR, click on “APR.” The rate calculated is 21.5273% (thus the APR).