Confused with quoted interest rate..

swift_gti

Hi all,

Been out looking at cars this weekend and the sales guy totted up monthly repayments to take some of the car on finance.
£6779 of the car would be financed at what he said was a flat rate of 4.25%.. he told me the monthly repayments were 1st month of £140, then 35 months of £213.
So I worked this out when I got home and came back with £7067 total @ 4.25%, making it £196 per month.
I queried it today with Capital Bank Plc - the people who actually sort out the finance and she said it was 4.25% and the extra was whatever APR the motor company had worked out..
I'm confused here, I figured it was 4.25% and thats it.. but from what she said is 4.25% + something extra...
Can anyone explain it in plain english as to how that works?//

CLAPTON

the true APR is about 7.5%

However i would ask for the full written details and take it away to read before agreeing to anything.

swift_gti

Thanks,
I'm definatley going to make sure I read through everything before signing on friday.
How can they quote its 4.25% is it to trick you into thinking its a really good deal or is it something standard? Most places I've seen quote just the APR.

CLAPTON

Obviously you must come to your own conclusion but it looks better than the APR.

The documents must contain the APR but the salesman like to 'talk you through' it so if there's any arguments afterwards its just one persons word against another.

Also check that these rates are guarenteed or are they just illustrative and you have to be credit checked and maybe offered a different (higher) APR at the last moment.

If your credit rating is good maybe try your bank and then try to negotiate a better price for the motor.

nomoneytoday

Insist on the garage giving you the APR and the total payment.
This will enable you to compare like with like.

Flat rates are easier to calculate but end up costing you more. APR is about twice a flat rate