Typical APR % Help

Buzzhorse

My partner and I are looking to buy a car and rather than taking out a loan from a lender her father is willing to offer us the money and get a return on it at less than the official APR % rate.
He is willing to lend us the £££ at less than the typical APR as long as he makes a return on his investment.
Any ideas how I would find out the info i need without actually applying for a loan? I don't want to apply as it would put a footprint on my credit rating.

Thanks

Rafter

Take a look at a best buy table in a newspaper or at moneyfacts?

A best buy £7.5k loan over 5 years has an APR of 6% which compares to a best buy savings account of 4.5%. The difference is how a bank makes money and covers costs and the risk of default.

Midway between the two might be 'fair' to both so a loan rate of 5.25%? Suggest you put something in writing that you will 'gift' the interest to her father and that way he gets the income 'tax free' as well!

You should be able to find a 'loan calculator' online somewhere that will tell you the fixed monthy repayment you need to make at that interest rate. Alternatively you can use the =PMT function on Excel - just remember to divide the interest rate by 12 to get a simple monthly equivalent.

Good luck

R.

Red_Cat

Putting in writing is underestimated but should be done, agreed and signed.

I'd say 5.25% or so is fair. look at what he would otherwise get in a savings account fixed for 5 years and come to a rate higher than that, but less than what the loan would cost.

blacksta

Has your father In Law done a credit check on you.