Car Loan

Devon_joy

Buying a new car. Car dealer says he can lend me £6250 at 4.9 APR with a £300 admin fee over 36 months the total repayment would cost me £1218.68 in interest. If I do Martin's calculator £6250 over 36 months @ 4.9% would be a total interest cost of £483. I know the garage is a HP agreement rather than a loan but how come the cost is so high? Any ideas anyone. I think I will be better borrowing £7500 at tesco's at 5.9%. This is the first time I have used this forum so do apologise if I have ended up in totally the wrong place!! I hate buying new cars!!:(

chanz4

Double their figure, he has quoted you flat rate

[Deleted User]

He didn't quote you an APR, He gave you flat rate, which is about half the APR.

You'll probably do better elsewhere, but perhaps not the 5.9% Tesco's rate.

fwor

It seems not uncommon for car dealers to "accidentally" use the term APR when quoting an interest rate that is not. The real APR will be printed on the agreement, and it will certainly be more than 4.9%.

Devon_joy

Deleted_User wrote: »

He didn't quote you an APR, He gave you flat rate, which is about half the APR.

You'll probably do better elsewhere, but perhaps not the 5.9% Tesco's rate.

Any ideas on a better loan? Once you go below 7000 the APR seems to get worse and I detest paying interest!!

JimmyTheWig

Devon_joy wrote: »

Buying a new car. Car dealer says he can lend me £6250 at 4.9 APR with a £300 admin fee over 36 months the total repayment would cost me £1218.68 in interest. If I do Martin's calculator £6250 over 36 months @ 4.9% would be a total interest cost of £483. I know the garage is a HP agreement rather than a loan but how come the cost is so high? Any ideas anyone. I think I will be better borrowing £7500 at tesco's at 5.9%. This is the first time I have used this forum so do apologise if I have ended up in totally the wrong place!! I hate buying new cars!!:(

4.9% of £6250 is £306.25.
Three years of this is £918.75.
Add on the £300 admin fee and you get to the total you were quoted.

As has been said, this is not an APR. It's a flat rate, on top of the fees.
I make it about 12% APR.

Devon_joy

fwor wrote: »

It seems not uncommon for car dealers to "accidentally" use the term APR when quoting an interest rate that is not. The real APR will be printed on the agreement, and it will certainly be more than 4.9%.

When questioned he did mutter that it was the flat rate and something about 9.9 APR??! I am pretty cute with finance but could not work the figures out that he came up with
Just trying to find a decent loan rate and I didn't really want a HP agreement anyway
The HP was with Santander but they are up at 6.7 on £7000

iolanthe07

I make it about 12% APR.

12% APR isn't bad these days, but why are car dealerships allowed to go on quoting flat rate? No one else does. Do they think people are stupid?

malkyh

Remember the representative APR you are quoted from loan companies is not necessarily what they will offer you. The car dealer has probably done a credit search on you which will show up if you then apply for a loan. If they offer you a crap APR rate and you don't take the loan, then that will be 2 searches on your file which will look bad for the next lender you approach. They may offer you a worse rate than the last lender.

If you are accepted for the 5.9% at Tesco then you'd be as well taking the £7500.

27col

iolanthe07 wrote: »

I make it about 12% APR.

12% APR isn't bad these days, but why are car dealerships allowed to go on quoting flat rate? No one else does. Do they think people are stupid?

Well, yes, they probably do think exactly that. Going on some of the posts in these forums they are probably right, unfortunately.