What is PAF?

Spanna1980

I took out finance on a car back in 2013. The repayment interest (APR) was 14.1% (much higher than I was told it would be when I took it out), but on the yearly overview statement that I received after the first year, it shows PAF: 7%.
I'm just wondering if anybody would know what this PAF stands for, and what it is. I have looked all over the internet to find out simply what the acronym stands for, but there's no information that remotely links to anything to do with finance.
Is it a PPI type charge?
Thanks in advance
Spanna

Willing2Learn

Hi Spanna1980 and welcome to the forum

https://en.wikipedia.org/wiki/Flat_rate_(finance)

[Deleted User]

It's the flat rate.

It's not an extra charge for anything.

molerat

First Google answer for "PAF interest"

Q. I have been quoted a flat rate of 6% by the dealership. Is this the same as the APR?
A. No, the rate you have been quoted is the interest rate charged per annum (PAF). The Annual Percentage Rate (APR) is the compounded rate used to give a standard comparison of the amount of interest and charges you are likely to pay on loans.

The interest is exactly the same as you were told, just expressed in the salesman's "make it look better than it really is" terminology. Did you expect anything less from a used car salesman ?

iolanthe07

Quoting Flat Rate instead of APR is an old trick of motor dealerships. They're about the only people left who still do it, and it should be illegal, though you will find the APR somewhere in the small print. You need to double Flat Rate to give an approximated indication of APR.