Help with Interest rates / APR??

daz69kay

Hi there, i am looking at buying a car. It'll be my first new car on credit or bank loan.
The car dealer gave me an interest rate of 5%. When i look at cheap loans it says 6.4% APR and my banks website says 10.4% APR... Is APR totally different than interest on finance, please help i is confused

Thank you

Phantom_Flan_Flinger

You need to clarify with the dealer what he's offering you.

Dealers often offer their deals as a flat rate. If that's what he's offering and not APR, then doubling his flat rate will give you a rough APR.

Make sure you know what you're signing up for.

daz69kay

Phantom_Flan_Flinger wrote: »

You need to clarify with the dealer what he's offering you.

Dealers often offer their deals as a flat rate. If that's what he's offering and not APR, then doubling his flat rate will give you a rough APR.

Make sure you know what you're signing up for.

so, if you double an interest rate is that basically the APR ?

nomoneytoday

Yep - as with a flat rate you pay off interest throughout the loan, even on the principal you have paid back already...

So a £10000 loan for 4 years at 5% flat has £500 interest per year, even though in year 4 you owe roughly £2500 not £10000 (its not a straight £2500 but you get the idea)

Phantom_Flan_Flinger

daz69kay wrote: »

so, if you double an interest rate is that basically the APR ?

If you double the flat rate you roughly get the APR.

Get the dealer to specify, just saying interest rate is too ambiguous.