Car finance hire purchase

jamees

Hi

This may seem like a silly question but I just wanted to clarify this please before I go ahead. I have been offered finance for a car at a rate of 3.99% pa.

This is for 3 years and at the end of it, you own the car (so not the ones where you pay more for a new one/trade it in....).

The car is worth £10k. So if I take this out, based on my calculations (and the dealer) I will pay £399 worth of interest for the year, and £1197 over the whole 3 years. Which is quite good right.?

Please just confirm maybe I am doing it wrong or they are telling me wrong info at this 'sales' point.

Thanks

PNPSUKNET

whats the apr?

jamees

3.99% is the interest rate i assume this is the apr

~Brock~

3.99% is likely to have been quoted as the flat rate per annum, in which case then yes, the interest charge will be £399 per year for 3 years.

This will be reduced if you settle early, but there may also be things such as acceptance fees or option fees added to the total amount payable which will not be part of the 3.99%, but will be included in the APR %, which is what you really need.

Providing any fees are reasonable, then the rate you have been quoted is pretty good.

jamees

the acceptance fee is £155 and the final settlement fee is £60. Which makes the total amount payable £1412. Have I calculated it right? If i get the apr and it is not 3.99% does it mean that I am paying more?

thanks

~Brock~

jamees wrote: »

the acceptance fee is £155 and the final settlement fee is £60. Which makes the total amount payable £1412. Have I calculated it right? If i get the apr and it is not 3.99% does it mean that I am paying more?

thanks

If the total amount payable is £1412 then that is how much you are paying.

It sounds like 3.99% is the flat rate. The APR, including the fees is approximately 9.15% - I say approximately because my calculation assumes 36 equal payments which it probably wont be if one fee is payable at the beginning and the other at the end.

9.15% APR is still a good rate - even with an excellent credit rating, there isnt much else around that is cheaper unless you can find a manufacturers discounted rate, which could limit your choice of vehicle.

jamees

So even if the apr is 9.15% i am only paying £399 per year??

So if there is another deal going for 7.9% apr, is that better for me?

jamees

but if the dealer tells me the apr is 9.15% how do I know I am only paying £399 in interets a year.
Sorrry I really dont wanna fall in a trap here
thanks

jamees

OK i will go and speak to them again and ask them to clarify the apr. and then how much interest a year. is there anything else?
thnaks

~Brock~

closed wrote: »

It should specify it in the paperwork.

Exactly. Just check the total amount payable on the loan agreement, or multiply the monthly payment by the number of payments to be made.

jamees

as the loan hasnt beent taken out i will ask them to print it out or something like a 'provisional' showing me...