There are different methods of computing and most states have a banking department which regulate all loans, so I would recommend contacting your states banking department, some provide this type information on their website.
I am in the process of retrieving this information from the regulatory body over here.
However the formula seems a bit complex and solving it for X (APR) is even more complex as it involves using Goal seek functionality.
We also have a rewritten form of the above using the concept of "flows"
Where S is the current balance of the flow as stated in the EU directive 2008/48/EC
At this time the regulatory body does not possess information on how to calculate this without using Excel and its Goal seek function. My goal is to do this in Filemaker hence my question.
Also after reading how this is calculated in the States it seems that Europe is using somewhat different methods and/or naming conventions.
Some pages on the Internet are putting APR equal to nominal interest and then calculating effective APR as effective interest. Over here APR is calculated by dividing the total cost of the loan with the amount paid to the debtor at the beginning of the loan. This works for a bubble loan with a life cycle of one year and one lump payment at the end of the cycle.
However when it comes to mortgages the above formula seems to be what is needed and I'm looking for information on how to implement it using Filemaker.
I found this PDF file from 2001 on the net:
In annex 2 "Calculating APRs with computers" there is mention of two methods to calculate APR.
Is there anyone here that can verify that I have found the methods to use or should I look for a different method?
As it turns out the bisection and Newton Rapes methods are but two of a family of root solving methods that can be used to solve this issue. To solve these types of calculations one needs to re-create the goal seek functionality as offered by Excel.