APR help

Mrs_H_2009

We got a car on finance in Feb 08 and we're looking at buying another and settling the finance on this. Because our credit wasn't great then, we knew the APR wouldn't be great anyway and according to the agreement it's 39.9%. However, when I've used a calculator to work out roughly what our settlement figure would be, this is calculating our APR at 43.3%. I've checked this with another website and it's coming out with the same answer with the same answer for the total amount payable/total charge for credit.

Have we been misled on this or am I missing something? I've also noticed that it says something to do with GAP insurance, which we didn't ask for - we told them we didn't want any extras. We also seem to have a document that says we have GAP insurance. Why I've never spotted this before I don't know.

Surely the 39.9% should be what we are paying? The total amount payable differs by some £500. Help please!!

CLAPTON

numbers.. some facts?

CHR15

Mrs_H_2009 wrote: »

I've also noticed that it says something to do with GAP insurance, which we didn't ask for - we told them we didn't want any extras. !

GAP Insurance is a GOOD thing, and is a requirement on a lot of car finance deals.

Like all Insurances though, when the term is up and you didn't claim, you regret paying it.

~Brock~

Unless the GAP insurance was compulsory it would not have been included as part of the APR on the agreement, but the chances are that you are putting the total monthly payment into your web based calculator including the payment for the GAP insurance, which is then assuming that the small extra payment each month is just more interest, hence the higher APR that is being returned.

That's my best guess anyway :beer:

Robert_Sterling

The reason a finance company likes a rate of 39.9% is that, as far as I know, no loan of less than 40% and been considered to be extortionate by a court.

Mrs_H_2009

The amount of credit is £6512.25 plus charges of £7732.75 totalling £14246, payable with 1 instalment of £250, 59 of £230 and 1 of £425.

I think the GAP looks like it is a one off payment of £230 as it says "If you have applied for GAP insurance, you agree to pay us the single premium of £230 for 62 months cover payable 2 months after the date of this agreement. NO INTEREST IS CHARGED ON THIS PREMIUM"

Thanks for any advice!