PCP deal interest rates

How do you know which rate Mazda & Mercedes are actually using behind the scenes in their calculations?

Pity you didn't post those figures up to start with as all is now clear.

The Mercedes Fixed Interest Rate is not a Flat Rate its the fixed rate charged only on the declining balance, the APR comes out slightly higher because of the arrangement fees or option to purchase fees. The effect of the fees on the APR is why it won't work in your calculator where as the Fixed Interest Rate does. The small difference in rates tells you what Mercedes mean by "Fixed Interest Rate"

The Mazda Fixed Interest Rate is a Flat Rate charged on the whole of the initial balance for the whole of the term.
You can tell it's a Flat Rate because the APR is always around twice the flat rate. (That's because in simple terms you owe on average roughly half the balance during the term of the loan, therefore to arrive at the same overall interest charge as the flat rate gives, the APR must be roughly twice the flat rate, the difference in rates is slightly less with a PCP because the average balance is higher due to the balloon not being paid down) Any fees of course if there were any would also be taken into account in the Mazda APR. Because it's a flat rate rather than a "proper" interest rate it won't work in your calculator.

If the Mazda APR works in your calculator, that would indicate there are no fees to take into account, so in this instance the Mazda APR is the same as the Mercedes Fixed Interest Rate (In basis terms not actual rates of course)


So while they are both called "Fixed Interest Rate" they don't actually mean the same thing.