Car Finance - how do i work out the APR/payments

Benson

Im going to a garage today to hopefully purchase a car and we will be discussing the finance when im there, but how do I work out what is a good deal or not?

Ive looked on the site and it says beware when they talk about flat rates etc but im trying to work out what a good APR is for Car finance.

I was to finance 8K so if they said 9.5% how do I work out how much overall I will be paying for the car? I would likely be taking it over 4 years.

I know that personal loans are cheaper than car finance but i need the option of being alble to give the car back to the finance company halfway through should my circumstances change due to working in a very unstable industry.

Ta.

Rafter

Benson,

Sounds like you have the right idea - always focus on the APR rather than flat rate.

As to what a good APR is, you must decide whether the premium you are paying for the ability to hand back is worth the extra money. Remember too that if you pay a deposit you are going to loose that if you hand back.

I suggest you work out the following:

What would a personal loan and a standalone payment protection policy cost you. That way if you are made redundant, the insurance policy will cover your payments for 12 months giving you time to find another job, keeping your car in the interim, or to sell the car, for hopefully more than the outstanding balance on your loan.

If you buy something like a 1 year old vauhall, peugeot or other non-german car, you should find that the value of the car will always be about the same as your loan, so the risk of not being able to sell your car and cover your loan is reduced.

Have fun car shopping!

R.