Is there any way in which this adds up?

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Spungal
Spungal Posts: 3 Newbie
in Loans
Hi just looking on some advice on a possible car finance I was thinking about taking out

So I went to look at a new car today and the salesman told me he could do a soft credit check and work out a car finance plan for me.

The car is £7950
£0 deposit
Term 52 months
Monthly repayment £199.19
And I was told the interest was flat rate 6.99%
Yet the total amount repayable is £10,717

I worked out £7950 over 52 months at 6.99% to be £9,237 and monthly payments of £178

Is there something I’m missing in the salesman’s calculations?
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  • Dobbibill
    Dobbibill Posts: 4,136 Ambassador
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    The flat rate is not the APR - the APR will be approx 12.6%.

    Someone better with figures will come along shortly with the formula. ;)
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  • Spungal
    Spungal Posts: 3 Newbie
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    Dobbibill wrote: »
    The flat rate is not the APR - the APR will be approx 12.6%.

    Someone better with figures will come along shortly with the formula. ;)

    Ah thanks, I think I was inticed in by the 6.99% but I looked more in to it and thought the numbers don’t add up.

    Can anyone can tell me what the flat rate 6.99% means and how is it different to apr?
  • Dobbibill
    Dobbibill Posts: 4,136 Ambassador
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    This may help https://www.moneysavingexpert.com/banking/interest-rates/


    The flat rate vs APR is highlighted in the bottom few paragraphs.
    I’m a Forum Ambassador and I support the Forum Team on the Budgeting & Bank Accounts, Credit Cards, Credit File & Ratings and Energy boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.

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  • Spungal
    Spungal Posts: 3 Newbie
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    Dobbibill wrote: »
    This may help
    The flat rate vs APR is highlighted in the bottom few paragraphs.

    Thank you that was a very helpful link! The salesman was trying to make me fall into believing I was getting 6.99% apr. Glad I didn’t sign anything!
  • ratrace
    ratrace Posts: 1,009 Forumite
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    Spungal wrote: »
    Thank you that was a very helpful link! The salesman was trying to make me fall into believing I was getting 6.99% apr. Glad I didn’t sign anything!


    this is not 100% accurate as such but as a general rule the APR is normally close to double of the flat rate,
    “People are caught up in an egotistic artificial rat race to display a false image to society. We want the biggest house, fanciest car, and we don't mind paying the sky high mortgage to put up that show. We sacrifice our biggest assets our health and time, We feel happy when we see people look up to us and see how successful we are”

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  • Edi81
    Edi81 Posts: 1,448 Forumite
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    Typical car sales!
    Why they can still get away with it is no ones business!
    Glad you worked it out before signing up.
  • dresdendave
    dresdendave Posts: 889 Forumite
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    Edi81 wrote: »
    Typical car sales!
    Why they can still get away with it is no ones business!
    Glad you worked it out before signing up.

    They tend to get away with it because so many people only have eyes on the shiny tin box on wheels with all the latest gizmos, that common sense goes out the window and they'll sign anything to get it on their drive. Presumably to impress their neighbours, who in reality probably won't even notice it.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    I thought it wasnt legal to show flat rate any more and APR had to be shown?
  • Nearlyold
    Nearlyold Posts: 2,300 Forumite
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    You have to show the APR but you can also use Flat Rate in a credit agreement as long as it can't be confused with the APR. Car dealers like to quote flat rates for two reasons, the main one being it sounds cheaper and secondly, its much easier to work out what the payments will be (you can do it on the back of a fag packet anywhere).
  • iolanthe07
    iolanthe07 Posts: 5,493 Forumite
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    AnotherJoe wrote: »
    I thought it wasnt legal to show flat rate any more and APR had to be shown?

    The APR will be there somewhere hidden in the small print. Car dealerships have got away with this deception for years and will continue to do so unless the law is changed.
    I used to think that good grammar is important, but now I know that good wine is importanter.
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