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

Add-on interest is a peculiar calculation which Margill Loan Manager (MLM) can handle easily to compute the true interest rate (APR).

For example, a car dealer advertises a rate of 12.50 per hundred per year on a 20,000 loan to be repaid in monthly payments over 4 years.

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 the reimbursement, the interest rate is 0.00%.

Once the data entered, press on “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).