12(1)The APR for a credit agreement to which sections 10 and 11 do not apply is calculated in accordance with the following formula:
APR = [C ÷ (T × A)] × 100
where
APR is the annual percentage rate;
Cis the total cost of credit;
Tis the length of the term, in years; and
Ais the average of the principal outstanding at the end of each interest calculation period during the term before applying any payment due by the borrower.
12(2)In calculating “A”, the following rules apply:
(a)
the principal outstanding at the beginning of the term is the result obtained by subtracting the total of all payments made by the borrower at or before the beginning of the term from the total of all advances received by the borrower at or before the beginning of the term;
(b)
the term is divided into interest calculation periods of equal length;
(c)
the cost of credit for each interest calculation period is calculated in accordance with the following formula:
C = (APR ÷ 100) × L × P
where
C is an amount equal to the cost of credit for each interest calculation period;
APR is the annual percentage rate;
L is the length of the interest calculation period expressed as a fraction of a year; and
P is the principal outstanding at the end of the interest calculation period before applying any payment due by the borrower;
(d)
the principal does not include any portion of the cost of credit, and no portion of the accumulated cost of credit is included in the principal outstanding at any time;
(e)
each payment by the borrower under the credit agreement is applied first against the accumulated cost of credit and then, to the extent that the payment exceeds the accumulated cost of credit, against the principal outstanding.
12(1)The APR for a credit agreement to which sections 10 and 11 do not apply is calculated in accordance with the following formula:
APR = [C ÷ (T × A)] × 100
where
APR is the annual percentage rate;
Cis the total cost of credit;
Tis the length of the term, in years; and
Ais the average of the principal outstanding at the end of each interest calculation period during the term before applying any payment due by the borrower.
12(2)In calculating “A”, the following rules apply:
(a)
the principal outstanding at the beginning of the term is the result obtained by subtracting the total of all payments made by the borrower at or before the beginning of the term from the total of all advances received by the borrower at or before the beginning of the term;
(b)
the term is divided into interest calculation periods of equal length;
(c)
the cost of credit for each interest calculation period is calculated in accordance with the following formula:
C = (APR ÷ 100) × L × P
where
C is an amount equal to the cost of credit for each interest calculation period;
APR is the annual percentage rate;
L is the length of the interest calculation period expressed as a fraction of a year; and
P is the principal outstanding at the end of the interest calculation period before applying any payment due by the borrower;
(d)
the principal does not include any portion of the cost of credit, and no portion of the accumulated cost of credit is included in the principal outstanding at any time;
(e)
each payment by the borrower under the credit agreement is applied first against the accumulated cost of credit and then, to the extent that the payment exceeds the accumulated cost of credit, against the principal outstanding.