Need help regarding contract law for Loan

Brock_and_Roll

Gaz83 wrote: »

To be honest, presumably you were happy to hear the monthly repayments as, after all, this is the important bit? And it shouldn't really matter if you were quoted the APR or the flat rate?

I would guess that the reason dealers quote flat rates and repayment amounts rather than APRs is that the vast majority of customers would prefer to hear them rather than a convoluted explanation of APR. I know I would, and I'm a mathematician so would have no problem at all understanding the APR in any case.

Errr...my late father was in the motor trade for 40 years. The reason his staff preferred to quote flat rates was.......because they looked lower!

Likewise they liked to say "you can drive round in a Jag for just £199 a month" rather than saying "over the next 5 years you will pay for the car again in interest" !!!

Gaz83

Brock_and_Roll wrote: »

Errr...my late father was in the motor trade for 40 years. The reason his staff preferred to quote flat rates was.......because they looked lower!

Likewise they liked to say "you can drive round in a Jag for just £199 a month" rather than saying "over the next 5 years you will pay for the car again in interest" !!!

But what I'm saying is that ultimately the monthly repayment bits are the parts people understand. And thus I can fully understand why these are the bits emphasised by salesmen.

bigadaj

Gaz83 wrote: »

But what I'm saying is that ultimately the monthly repayment bits are the parts people understand. And thus I can fully understand why these are the bits emphasised by salesmen.

The monthly repayment may be the bit that people understand but that is just a sad indictment of the financial illiteracy prevalent amongst the wider population.

You might be able to afford your weekly shop in one place, but there's no need to shop there if you can get cheaper next door, even if you you could afford the first place.

Flat rate is simply a devious trick to fool people into thinking they are getting a better deal. If the dealers wanted to be clear then maybe they coud explain that flat rate means that you are continuing to pay interest on money you've already paid back, that would be very illuminating to many people.

BillJones

bigadaj wrote: »

of the financial illiteracy.

Apologies, I know it's pedantic, but "illiteracy" in numerical matters is innumeracy..

bigadaj

BillJones wrote: »

Apologies, I know it's pedantic, but "illiteracy" in numerical matters is innumeracy..

I know what you mean but I still think financially illiterate is a better description.

Many people may have a problem with basic numerical calculations but they also, and probably more importantly, don't have the knowledge to understand what they are signing up to or understand the contract terms, or implications thereof.

This thread is an example of both elements I suppose.

BrassicWoman

I'm with the pedant. Innumerate.

BillJones

bigadaj wrote: »

This thread is an example of both elements I suppose.

I suppose so.

Flat rate, of course, is the method that makes it easy to calculate the actual interest payable, whereas APR is the best explanation of the actual cost of the money, on an annualised basis. Both should probably be given, but that'd just confuse even more people.

Phil_Linder

Can I also step in here and add to the issue that I may not have made clear...

I was offered by another lender 12.8% APR on a consolidated re-finance. The advertised rate they had was 4.1% APR. When speaking to the Dealer about what I was offered it was them who said "We can do you finance at 7%".

So they weren't even doing a like for like comparison when mis-leading me.

Flat rate or APR is irrelevant to me. Companies advertise APR so I use that as the comparison. The dealer then threw in 7% and never told me it was a flat rate.

Maybe I was being naive. Maybe I wasn't thorough. But I still don't think a company can try and mis-lead customers, and leave it up to them to spot the deception. Thats just not honest.

BillJones

Phil_Linder wrote: »

But I still don't think a company can try and mis-lead customers, and leave it up to them to spot the deception. Thats just not honest.

Of course they can. They all do. Iceland suggest that if you buy their prawn ring you'll have a house full of glamourous party people round. Coke suggest that if you buy their zero-cal drink you'll be seen as an excitiing sports junkie, and Thomas Cook suggest that the beach that you'll be visiting is deserted except for you and a butler dressed all in white.

Unles a commpany breaches a law or regulation, they can absolutely choose to out a positive spin in their product. It's been the case for hundreds and hundreds of years, and is not about to change.

I do have sympathy when people fall for it (and anger at myself whan I do...), but it is beyond naive to believe that a company will explain everything in the best light when you are buying.

Pixie5740

BillJones wrote: »

Of course they can. They all do. Iceland suggest that if you buy their prawn ring you'll have a house full of glamourous party people round. Coke suggest that if you buy their zero-cal drink you'll be seen as an excitiing sports junkie, and Thomas Cook suggest that the beach that you'll be visiting is deserted except for you and a butler dressed all in white.

Unles a commpany breaches a law or regulation, they can absolutely choose to out a positive spin in their product. It's been the case for hundreds and hundreds of years, and is not about to change.

I do have sympathy when people fall for it (and anger at myself whan I do...), but it is beyond naive to believe that a company will explain everything in the best light when you are buying.

Are you saying that despite squirting all that Chanel Coco Madamoiselle on myself that I'm not going to morph into Keira Knightley?