Two loans over to a 0% Credit card?

r6demon

Could some one please show me how this calculated as i need to now know. Thank you.

Quimoi

r6demon wrote: »

Could some one please show me how this calculated as i need to now know. Thank you.

Using a calculator is the easiest way:
http://www.thisismoney.co.uk/money/cardsloans/article-1633405/Loan-repayment-calculator.html

r6demon

I need to know this so that I can find out the flat rate I should have been expecting please. Today looks like being a real eye opener.

Quimoi

With your figures the flat rate looks to be about 8.4% - to be certain though it will say in the finance agreement if you have a copy to hand.

Tixy

It is usual for car finance dealers to quote a flat rate, but your credit agreement will definitely show you what APR your loan is.
And the installments and total amount payable is still the same as what you have always known it was.

That said it does seem like a sensible idea to try to refinance, either through a money transfer 0% credit card such as MBNA, or to a loan with a cheaper APR.

CLAPTON

the calculator above lets you work out the repayment, total interest and monthly payments for a 7.8% APR i.e. about 11,480 i.e. interest of 1,645


'flat' rate so beloved of car salesmen work out the total interest by saying
9835 x 7.8% x 4 = 3068 : there may be a set up fee also


they usually justify the 'explanation' to the customer by saying it's easier to understand


the actual loan agreement however should show the true APR (round 15-16%)

Paully232000

with my basic knowledge, and please do check, the difference between a flat rate and an APR is that with a flat rate it is calculated that you will pay that on the initial amount borrowed no matter what has been repaid. whereas with an APR you are just paying that on the amount outstanding.
Therefore even in year 2, 3 and 4 you are still paying the flat rate of interest on £9385 whereas with APR you would only pay interest on the oustanding balance on any year.

Someone will come along and explain that better than i have i am sure.

Pincher

Paully232000 wrote: »

with my basic knowledge, and please do check, the difference between a flat rate and an APR is that with a flat rate it is calculated that you will pay that on the initial amount borrowed no matter what has been repaid. whereas with an APR you are just paying that on the amount outstanding.
Therefore even in year 2, 3 and 4 you are still paying the flat rate of interest on £9385 whereas with APR you would only pay interest on the oustanding balance on any year.

Someone will come along and explain that better than i have i am sure.

Flat rate is the rate you pay on the outstanding balance.


APR includes the arrangement fee, redemption admin fee, etc. APR is supposed to allow you to compare two products with different charging structures.


I much prefer the flat rate plus discrete charges listed separately.

Tixy

Pincher wrote: »

Flat rate is the rate you pay on the outstanding balance.

Flat rate is the rate you pay on the original balance. Not the outstanding balance.

CLAPTON

Paully232000 wrote: »

with my basic knowledge, and please do check, the difference between a flat rate and an APR is that with a flat rate it is calculated that you will pay that on the initial amount borrowed no matter what has been repaid. whereas with an APR you are just paying that on the amount outstanding.
Therefore even in year 2, 3 and 4 you are still paying the flat rate of interest on £9385 whereas with APR you would only pay interest on the oustanding balance on any year.

Someone will come along and explain that better than i have i am sure.

no this is 100% incorrect


The issue is for any give loan amount (9835 in this case) and given period (4 years) and for any given total amount of interest collected (3,068) you can calculate the APR as round 15-16% or the flat rate as round 7.8%.


Obviously, corrupt lying car salesman like to use the lower figure (surprise surprise) than the figure that allows the customer to compare their rate with a normal bank loan. (which will always be quotes as an APR)


The sole and only purpose of the 'flat' rate is to trick the customer into thinking they are getting a cheap loan. Sadly they frequently succeed.