I need to know the APR?!

woeisme

I have a MINT card which I'm slowly but surely trying to pay off as fast as possible. My minimum payment is £29/month and the monthly interest rate is 1.313%, please can someone tell me what this makes the APR so I can sort out my snowballing. Many thanks in advance!

debtbuster2K5

Hi,

APR is 15.8%.

Basically 1.313% X 12 = 15.76%

Regards

grumbler

More correct result is 16.95%:

1.01313^12-1=0.1695

Don't know if this makes any difference for you ...

Robert_Sterling_3

An even more correct answer is 16.9451205%

However this is not the APR, which has a legal definition, it is rather the AER i.e. The Annual Equivalent Rate of the actual monthly rate.

Lawbag_2

so what is the difference between an APR which most people have a clue about how good or bad it is, or a Flat Rate, which some loan companies seem to quote as being "better"?

when we were looking to buy a car from Carland they were quoting a Flat rate of 5.9%, but wouldnt divulge how it related to the APR, other than saying it was more accurate and a better reflection.

it this just a case of degrees centigrade and degrees fahrenheit, in that they both measure temperature, but in different and perhaps misleading ways?

mrcow

Lawbag wrote:

when we were looking to buy a car from Carland they were quoting a Flat rate of 5.9%, but wouldnt divulge how it related to the APR, other than saying it was more accurate and a better reflection.

Yes, that's because they are trying to completely mislead you and are relying on the fact that most people would just see 5.9% and think it was an APR, or other people will just blindly believe what a car salesman will tell them! I think by law they have to quote an APR too though don't they?

Please tell me you didn't buy from them....because......

A flat interest rate is worked out thus......they take the sale value eg. £1000 over two years and then apply 5.9% for each year.....so:

Total interest is £59 x 2......£118
They then divide the total amount to work out your payments......£46.58 per month.


Which some kind person will hopefully tell me the APR on.... is it about 11% (roughly?)

lipidicman

Wow, is that really how a flat rate works?. It takes NO account of the fact that you pay off some of the loan each month? That is criminal if it is right

Lawbag_2

I did not thankfully buy from them, but they throw these "low" %rates out during their sales pitch and advertised on each car, but it is the small print that says Flat Rate, no mention is made of APR or its equivalent.

I doubt that charing a flat rate is illegal, just a different a misleading way of selling a high APR (e.g. 19-25%) all wrapped up in a "cheap" flat rate.

If you are looking for a loan, the 9.9% is what most banks offer, some up to 15.9%, and only homeowners get rates as low as their mortgage rate of 5.4%. So these places offering 5.6% flat rates - they are fooling the common man uninformed buyer.

mrcow

Welcome to MSE lawbag

Glad to know that you didn't go with the finance deal.

If you are paying anywhere between 9.9% to 15% on any loans, let us know here what they are and we may be able to help with some ideas as to reduce your interest payments.

grumbler

There was a thread on this subject recently:

APR vs Flat Rate Calculations

Robert_Sterling_3

A friend of mine was a car dealer.
Most people could not afford to buy even a second hand car without taking a loan.
Car dealers used Flat Rates.
e.g. 10% Flat Rate for 3 years.
Car costs £1000
10% for 3 years = 30%
Therefore total interest = £300
Total repayments over 3 years £3300
£1300 divided into 36 equal payments ( almost )
1 payment of £36.15 then 35 payments of £36.11 Total £1300
It sounds as if the actual interest rate is 10%
The APR, however long the loan, will never be more than double the Flat Rate
So in this case it will not be more than 20%
But it will be close to 20%.
As a rough guide just double the Flat Rate to get the APR
My friend made a bob or two by selling the second hand cars.
He also got a bob or two from lenders to whom he introduced his customers.
He gave up selling second hand cars and became a loan broker ...
He made big bucks.
He gave up being a loan broker and became a lender.
He made Mega Bucks.