New van purchase. Understanding flat rate vs APR

jrterror_2

Hello.
I am considering buying a new van. I have been reading lots and learnt much. But as sometimes is the case, more knowledge brings new questions
Regarding HP finance deals, I think I understand the difference between Flat Rate interest and APR. However, my question is this...if I am happy with the amount of the monthly repayments and I am fully aware of how much above the cash price of the vehicle I shall be paying (interest), does it matter if I have been quoted on a Flat Rate or an APR?

Without placing words in ones mouth, I'm thinking; with Hire Purchase (HP) the car does not belong to me until the final instalment has been paid.

Thank you

PeacefulWaters

APR exists to allow you to compare the cost of borrowing with other lenders. Flat rate doesn't allow you to do this where other fees exist within a finance package.

So I'd suggest knowing what the APR is and seeking out the cheapest deal for you.

jonesMUFCforever

Flat rate - I was taught in school that generally speaking to double flat rate to give you the approx APR.

iolanthe07

Flat rate is a trick used by motor dealerships to fool people into thinking they are paying a lower interest rate than they really are, though they are obliged to quote the APR in the small print. No other trader seems to do this. If you are aware of this and happy to go ahead, then of course it doesn't rally matter. Under Hire Purchase the vehicle doesn't belong to you until the final payment. You hire it with a commitment to purchase it.

Nearlyold

iolanthe07 wrote: »

Flat rate is a trick used by motor dealerships to fool people into thinking they are paying a lower interest rate than they really are, though they are obliged to quote the APR in the small print. No other trader seems to do this. If you are aware of this and happy to go ahead, then of course it doesn't rally matter. Under Hire Purchase the vehicle doesn't belong to you until the final payment. You hire it with a commitment to purchase it.

Actually there is no commitment to purchase at the end, even with traditional HP, though as you would have paid for it in full it would be a bit daft not to pay the Option to Purchase Fee

PeacefulWaters

jonesMUFCforever wrote: »

Flat rate - I was taught in school that generally speaking to double flat rate to give you the approx APR.

I bet your school examples didn't include up front fees at one end of the agreement and an option fee at the other end.

jonesMUFCforever

PeacefulWaters wrote: »

I bet your school examples didn't include up front fees at one end of the agreement and an option fee at the other end.

That's what the ''approx'' was for;)