APR Calculations

[Paule]

I am trying to confirm whether an APR quoted by a car dealer is correct.

I have done a couple of caluclations and my figure is a lot higher.

I know there are various methods of doing this, which is why I am asking for opinions

Here are the figures to use

Option 1)
Total to finance £3615.00
36 payments
£138.05 per month


Option 2)
Total to finance £3975.00
36 payments
£148.05 per month

Thnaks for you help

[Budgie]

Re: APR Calculations

Assuming monthly compounded interest I calculate the applicable rate as 22% and the APR is 24.36%.

It would be cheaper to do this via an overdraft or maybe even on some type of low interest credit card.

Budgie

[Paule]

Re: APR Calculations

Thanks Budgie

They are the figures that I came up with

The dealer quoted those figures as being 12.75%

[Paule]

Re: APR Calculations

For anyone interested the OFT guide on APRs is attached

[Budgie]

Re: APR Calculations

Thanks Budgie

They are the figures that I came up with

The dealer quoted those figures as being 12.75%

Well he is a lying so and so then ............. LOL

See if he will give you a quote with just the APR figure quoted !!!!!!!!!!!!!!!

[Paule]

Re: APR Calculations

I am planing on paying another visit at the end of the month, so i can nail his hat on with the price when he is trying to get his sales figures up.

Then i will throw in the 'How did you work that out' question and see what he says then.

I know it should be 12.75% as that is what rate the finance company has agreed as they have told me, the salesman has told me and i have seen it on his computer as well.

So he is either trying to shaft me, in which case the contract with the figures on will be fraudulant??? or he just has tried to work it out manually and cocked it up.

If i had done the deal and the paperwork says 12.75% but the figures didnt relate to that rate, what would my options be, ie who would i report them to etc?
I presume the FSA, OFT?

[Paule]

Re: APR Calculations

Ok I have worked this out and if it is a 'Flat Rate' rather than 'APR' then the figures work

I will just have to see how he describes it, and if he does say its a flat rate I will ask him to confirm the APR and see if he comes up with the figures we got

[Paule]

Re: APR Calculations

Here is Great calulator for working them all out

Javascript Calculator for Compound Interest (APR) or Flat Rate Interest

[argentarius]

Re: APR Calculations

Car dealers ALWAYS quote "flat" rates because their APRs are normally bad. It's terrible practice. Eventually you'll get something showing the actual APR, but normally so far down the line that people don't want to pull out of the deal.