Loan advice for new car

staffiecat

Hi there,
I am shopping around for loans to purchase a new car. The dealership has offered me the following and I wondered if you could give me some advice.

Car costs 14,600. Laying down 1,500 deposit - therefore borrowing £13,100.

Dealership has offered 'flat rate' of 7% over 48 months but have calculated the monthly payments as being £358.00 - I have checked this figure in the loan calculator tool and i can't match this at the 7% interest rate. Instead it seems to be a 14.5% interest rate.

When i queried this with the dealer they said that it was 14.5% APR based on a flat rate of 7%

I am very confused by this as i know that i could shop around and get a deal of 7.7% elsewhere.

Can someone explain whether it would all work out this way please.

Also, can i ask one final question. If i were to sign up to a loan, is there a cooling off period - i.e. a 14 day period that you could cancel without obligation ?

thanks

somethingcorporate

staffiecat wrote: »

Hi there,
I am shopping around for loans to purchase a new car. The dealership has offered me the following and I wondered if you could give me some advice.

Car costs 14,600. Laying down 1,500 deposit - therefore borrowing £13,100.

Dealership has offered 'flat rate' of 7% over 48 months but have calculated the monthly payments as being £358.00 - I have checked this figure in the loan calculator tool and i can't match this at the 7% interest rate. Instead it seems to be a 14.5% interest rate.

When i queried this with the dealer they said that it was 14.5% APR based on a flat rate of 7%

I am very confused by this as i know that i could shop around and get a deal of 7.7% elsewhere.

Can someone explain whether it would all work out this way please.

Also, can i ask one final question. If i were to sign up to a loan, is there a cooling off period - i.e. a 14 day period that you could cancel without obligation ?

thanks

The APR on that does sound high - have you considered a personal loan and being a cash buyer?

staffiecat

yes i have considered a personal loan - have looked on moneysupermarket and seem to be able to find deals at 7% but i was concerned that it could also mean the same APR as the dealer !

Do you know whether this means that the dealer is in fact offering me an interest rate of 14.5% rather than the 7% that they keep quoting. I am so confused.

somethingcorporate

staffiecat wrote: »

yes i have considered a personal loan - have looked on moneysupermarket and seem to be able to find deals at 7% but i was concerned that it could also mean the same APR as the dealer !

Do you know whether this means that the dealer is in fact offering me an interest rate of 14.5% rather than the 7% that they keep quoting. I am so confused.

Make sure you are comparing apples with apples. The flat rate should be ignored for comparison purposes. Banks etc generally quote APR so you should be comparing these rates. You are likely correct that the finance offered by the dealer is considerably worse than what you can get from a bank.

More info on this link: http://www.easypeasy.com/guides/article.php?article=253

Quick comparison of APR and flat rate.

staffiecat

Thanks for the article - really explains things.

My worry now though is that I think that my husband signed up to this agreement - he isn't sure but did sign some paperwork with the dealer. He hasn't been given a copy of any of the paperwork - do you know whether we would have the right to cancel if he has actually signed this ?

jonesMUFCforever

staffiecat wrote: »

yes i have considered a personal loan - have looked on moneysupermarket and seem to be able to find deals at 7% but i was concerned that it could also mean the same APR as the dealer !

Do you know whether this means that the dealer is in fact offering me an interest rate of 14.5% rather than the 7% that they keep quoting. I am so confused.

Finding deals on moneysupermarket.com and getting them are two very different things especially as every credit search will make an application more difficult.

A rough guide to working out APR is to double the flat rate.