Can any one tell me flat rate equivalent to 9.9% APR please

inmypocketnottheirs

Hi All,

Would be grateful if any one could give me an equivalent flat rate for 9.9%APR.

Many thanks :beer:

Rafter

Need more information about the duration of loan and amount.

If you are looking at say a car dealership loan over 3 years the flat rate equivalent of 9.9% APR is 5.1%

For those who are curious and have never seen this before:

Car dealers often quote a 'flat rate' for finance deals.

If the rate is 5% you pay 5% of the orginial loan amount for each year of the loan.

Because the amount of loan outstanding is reducing all the time as you make payments, the APR you are actually paying is around twice as much as the 'flat rate' they quote.

This makes their finance deals look much better value than personal loans, even though they are not.

By law they have to give you the equivalent APR before you sign, but many consumers get conned.

R.

tomstickland

Oh, I get it, you pay 5% of the original amount per year, but because the average amount you owe over the loan period is roughly half of the loan, the APR is approximately double the flat rate.

Stonk

I'm surprised to discover the practice of quoting flat interest rates still going on. It's a con - no other area of financial services would dare use it. They get you all comitted mentally, thinking "wow, I've never seen a personal loan for such a low rate", and then most people don't quibble when they see the real APR (which is probably quickly swept uinder the carpet in a blu or paperwork anyway).