Car Loan help

mjb71

Morning
My girlfriend has applied and been accepted for a car loan, but I'm trying to work out the interest & APR, but failing miserably!

The car is £7590, she is putting £1000 deposit, so the finance is for £6590. Credit facility fee is £49 and completion fee is £399.

The interest per year is 9% and the APR is 18.7%.

Any help with the interest & APR would be appreciated.

Thanks
Mark

[Deleted User]

The key fact doc will tell you how much interest she will have to pay.

It will also depend on the term of the loan she chooses.

BugsyBrowne

9% is the flat rate and the actual apr is normally double that.

mjb71

BugsyBrowne wrote: »

9% is the flat rate and the actual apr is normally double that.

So tell me if I'm getting this right.....(or wrong)

9% is what she will be paying over the 60 months of the loan, and the APR is the annual calculation of that interest?

So each month the actual interest is getting lower, as she's paying off the initial amount?

Cheers

BugsyBrowne

No she will be paying 18.7%

mjb71

so where does the 9% come in?

BugsyBrowne

mjb71 wrote: »

so where does the 9% come in?

"Most garages will offer finance but a common tactic is to quote for a loan at a 'flat' interest rate that sounds attractive. But it's important to know the APR (annualised percentage rate), which tells you the total amount of interest you'll pay each year including any set-up fee.
Its a common practise for car dealers as they see 5% or 8% and customers are like that ain't bad when really it's double that.

SeanG79

The 9% is a flat rate per annum, APR is the Annualised Percentage Rate. Dealers often quote flat rate for 3 reasons: its simple to work with and can easily be demonstrated on a calculator for customers, it is ±half of what the APR figure is (depending on the term) and it excludes other fees like admin fees or option to purchase fees so looks cheaper.

So £6590 @ 9% flat over 3 years, interest would be £6590 x 9% x3, or £1779.30 but this doesn't take into account the facility fee or the completion fee.

clausbrown

BugsyBrowne wrote: »

9% is the flat rate and the actual apr is normally double that.

From what i have learned today, A flat rate is 6% APR. I have learned this the very hard way. So just be sure this is what you want before you get sucked into something And make sure all the information is correct on all forms before you sign anything.

[Deleted User]

clausbrown wrote: »

From what i have learned today, A flat rate is 6% APR.

No. A flat rate is a flat rate. It could be 1% or 1000%. It's not a specific number.

Eonel

Any interest rate could be quoted as a Flat Rate or an APR.

Car dealers like the Flat Rate because it is a lower number. Fortunately by law they are also required to quote the APR.

The APR is the only number you should look at. It is the only number you can compare with other Loans, Credit Cards etc.

In this case the APR is 18.7%. OP is paying a similar rate of interest to many credit cards and considerably more than many mainstream Bank loans.