car loan at 19.9 apr

denibabe

my car was £3499 at 19.9 apr over two years ,the figures are £203.84 a month the interest is £696 the first year and the same again for the second year ,i thought with APR you pay the interest on what is remaining after your first year sound like he as done FLAT RATE as opposed to APR it says APR on my agreement,should i question this or is he right.

CLAPTON

Car dealers love to talk about 'flat' rate because is give a lower interest rate figure than APR and tricks people into thinking they are getting a good deal.

It basically means nothing about how the interest is actually paid.

The intererst is based on the capital amount remaining each month, so, in the first year you pay more interest than the second year because you owe more money in the first year than the second.

Were there fees or other costs (PPI or gap insurance ) because a loan at 19.9% for 3499 over 2 years should work out at about 180 per month?

denibabe

CLAPTON wrote: »

Car dealers love to talk about 'flat' rate because is give a lower interest rate figure than APR and tricks people into thinking they are getting a good deal.

It basically means nothing about how the interest is actually paid.

The intererst is based on the capital amount remaining each month, so, in the first year you pay more interest than the second year because you owe more money in the first year than the second.

Were there fees or other costs (PPI or gap insurance ) because a loan at 19.9% for 3499 over 2 years should work out at about 180 per month?

yes clapton that was the figure i was getting close to of around the £177 so why is he charging me £203.84 a month ive looked at my agreement theres no ppi or gap insurance i think he is trying to diddle me.

CLAPTON

who is the loan with?
what exactly do the loan T&Cs sy about the interest rate.. do they definitely say APR?

from what you posted it does seem that 19% is the flat rate and the APR is about twice that.

~Brock~

That loan has a flat (annual) rate of 19.9%.

Assuming none of the total charge is made up of fees, the calculation to work out the flat rate is as follows.

203.84 x 24 = 4892.16 total payable. Of this £3499 is capital and the difference, £1393.16 is interest. Divide that by the number of years (2) and the interest per year is £696.58. Divide that by the capital and you get 19.90797%

The APR is a completely different calculation, used to give an overall comparison of agreements which use different interest calculation methods.

The APR for your agreement appears to be 40.52%

denibabe

CLAPTON wrote: »

who is the loan with?
what exactly do the loan T&Cs sy about the interest rate.. do they definitely say APR?

from what you posted it does seem that 19% is the flat rate and the APR is about twice that.

hi clapton got my agreement in front of me total cash price £3499 then it says interest £1392.60 term of agreement 24 months APR 19.9% i have just explained this to garage and they said call back tomorrow as the owner is away till then.

~Brock~

For the APR to be 19.9%, your monthly payment would need to be £175.16, giving a total interest charge over the term of £705.06.

Methinks they have screwed up.

denibabe

brock nicely explained surely they have to sort it out ,how would you go about it.

~Brock~

Depends how long you have had the agreement running for. Who is the actual lender?

You really need to be speaking to them in the first instance and highlight the issues, in a polite but firm manner.

One question - is the agreement hand written or printed? If it is printed then that is more worrying because it signifies a general failing in their software, as opposed to what is possibly a human error.

First of all - are you absolutely sure that the figure you are quoting is described as the APR? From May 2005 it was a requirement to show not only the APR but also the annualised rate used to calculate the interest. Are you sure that the correct APR does not show elsewhere on the agreement?

denibabe

brock i phoned garage but the owner was off today so i spoke to one of there sales people who clearly explained to me its not flate rate its APR at 19.9%. THE COMPANY name is A+P ENTERPRISE just wondering if they know about this, i have 22 payments left.

denibabe

its aprinted version