You take out an installment loan to purchase a fishing boat costing $3,900. You make a down payment of $1,000 and finance the balance by making monthly payments of $100.53 for 36 months. Use the APR formula to find the APR.

APR formula = (Finance charges/total balance) x 365

Purchase price = $3,900

Downpayment = $1,000

Total financed = $2,900

Payments (36m) = $100.53

Total amount = $3,619.08

APR formula = (Finance charges/total balance) x 365

APR = ($3619.08/2900) x 365

APR = 4.5%