What is the interest rate?

Suited72

Bought a van for £19190 total and I asked the garage what the interest rate was if I had it on finance and was told 4%. I calculated that online using a loan calculator and interest was around £2000 which I thought was ok.

They drew up the paperwork which didn't mention the interest rate but just gave 49 monthly repayments of £480.

Later I worked this out and realised the interest total was £4400 ish, calculated this online and it showed around 10%.

So I phoned the loan company and they said I was working it out wrong, and that interest was added at the start and was a 4% loan.

I kind of understand that, what I can't understand is how the 2 types of loan can have such a dramatic effect on the amount paid back, yet are both called 4% loans? I see a lot of opportunity for misuse if people use a loan calculator Like me.

There was no apr on the loan agreement and it also didn't say the total amount to be repaid.

PeacefulWaters

Go on, have another look at your loan agreement. There is an APR on it.

Nebulous2

It's common practice for garages to quote a 'flat' rate. The Apr is roughly double that.

I'm not sure why they get off with it, but they do.

Look at the agreement and see what it says about repaying early. If you can borrow at a lower rate it could be worth doing that and paying it off.