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    car loan advice needed... am I being ripped off?

    I have been offered a loan for car finance...however things don't add up ??

    Car value: £ 4995
    Deposit put down: £ 1250
    Amount financed: £ 3745

    APR offered: 8.5%
    Loan time: (3.5 years) 41 months

    Repayments of £ 127 per month are to be paid...

    I keep gettin around £ 109 ish per month with my calculations... whats going on?

    Any advice appreciated thankyou.

    26 Comments

    Maybe thier 'payment protection' ? Paying for extended warrentys etc?

    Original Poster

    Good point!.... does 127-109 = £18 extra a month sound about right for payment protection insurance?

    when i bought me car they kept telling me the interest rate but they failed to say it was there FLAT rate not the APR which was nearly double the rate they told me ,

    ele-font;5334871

    Good point!.... does 127-109 = £18 extra a month sound about right for … Good point!.... does 127-109 = £18 extra a month sound about right for payment protection insurance?




    When I looked into a car loan there was payment protection before I even asked about it, and a warranty which was a certain amount a month too....I think it could be that

    Exactly, as above, it sounds like they have given you the flat rate and not APR, thus you are charged 8.5% on the total loan amount per year, not on the outstanding loan.

    Original Poster

    louise.123;5334879

    when i bought me car they kept telling me the interest rate but they … when i bought me car they kept telling me the interest rate but they failed to say it was there FLAT rate not the APR which was nearly double the rate they told me ,



    oh right... whats the difference between FLAT and APR? they told me 8.5% will be a 'fixed rate' for me :thinking: .

    ele-font;5334927

    oh right... whats the difference between FLAT and APR? they told me 8.5% … oh right... whats the difference between FLAT and APR? they told me 8.5% will be a 'fixed rate' for me :thinking: .



    APR is NOT the same as the interest rate.

    The interest rate and the APR can be totally different amounts

    See here, on a one year loan the Interest is 20% but the APR is 40%

    moneymadeclear.fsa.gov.uk/pro…tml

    People who offer money for car loans always try to rip you off.

    Try to get a loan from the bank.

    ele-font;5334927

    oh right... whats the difference between FLAT and APR? they told me 8.5% … oh right... whats the difference between FLAT and APR? they told me 8.5% will be a 'fixed rate' for me :thinking: .



    The flat rate is their way of confusing you through making it more simple (if that can ever make sense). Say you borrow £1000 at a flat rate of 10%, that means you will pay 10% on the total loan amount (£1000) for each year of borrowing. However, if it is APR rate, that means that you only pay it on the existing loan amount.

    That is my understanding of it, but I have never borrowed money.

    Original Poster

    guilbert53;5334978

    APR is NOT the same as the interest rate.The interest rate and the APR … APR is NOT the same as the interest rate.The interest rate and the APR can be totally different amountsSee here, on a one year loan the Interest is 20% but the APR is 40%http://www.moneymadeclear.fsa.gov.uk/products/loans/what_is_apr.htmlPeople who offer money for car loans always try to rip you off.Try to get a loan from the bank.



    So even though my interest rate is quoted @ 8.5%... my APR could roughly be 17%? hence the £127 per month repayment?

    Look here... carbuyingguide.org.uk/car…php
    it comes out as £117.87 per month on a flat rate of 8.5% so still a tenner less. Have they not given you a detailed breakdown of what you are paying for what?

    ele-font;5335013

    So even though my interest rate is quoted @ 8.5%... my APR could roughly … So even though my interest rate is quoted @ 8.5%... my APR could roughly be 17%? hence the £127 per month repayment?



    It still wouldn't make sense if that is the rate, so you will need to find out what "extras" they have included in that price, and what the actual APR is and the flat rate. They should have explained all of this.

    Original Poster

    pghstochaj;5335010

    The flat rate is their way of confusing you through making it more simple … The flat rate is their way of confusing you through making it more simple (if that can ever make sense). Say you borrow £1000 at a flat rate of 10%, that means you will pay 10% on the total loan amount (£1000) for each year of borrowing. However, if it is APR rate, that means that you only pay it on the existing loan amount.That is my understanding of it, but I have never borrowed money.



    I think I made sense of that... I think I'm using the wrong loan calculators. Are there any out there that will give me my correct repayment figure or any formulae to use?

    £ 3745 x 108.5%

    APR of 8.5 x 41 months = 29.04 % Total

    129.04 x Principle = 4833

    Mthly repayment = 4833 / 41 months = 117.87

    THEREFORE

    The componant parts you show are incorrect. Look at the quote again.

    Well it depends on what you would like to know and what interest rate type you would like to use. The easiest way if you don't fully understand it is to use the online calculators, if you understand it a little more, it is very simple to set up a very basic Excel model for it.

    Banned

    Go to your bank for a personal loan will be safer and you will actually own the car so can sell it if you get in trouble. Hire purchase means the car dealorship still own the car.

    lumoruk;5335212

    Go to your bank for a personal loan will be safer and you will actually … Go to your bank for a personal loan will be safer and you will actually own the car so can sell it if you get in trouble. Hire purchase means the car dealorship still own the car.



    it actually means the finance company own the car.

    agreed that a personal loan is a better idea by far

    Original Poster

    gerrygedder;5335163

    £ 3745 x 108.5%APR of 8.5 x 41 months = 29.04 % Total129.04 x Principle = … £ 3745 x 108.5%APR of 8.5 x 41 months = 29.04 % Total129.04 x Principle = 4833Mthly repayment = 4833 / 41 months = 117.87THEREFOREThe componant parts you show are incorrect. Look at the quote again.



    Interesting calculation :thinking:... I think some sort of payment protection has been added as an extra, that is why they are charging me £127 p/m.. repped for the calculation!

    Original Poster

    boothy;5335240

    it actually means the finance company own the car.agreed that a personal … it actually means the finance company own the car.agreed that a personal loan is a better idea by far



    Bank loan is definately the way to go... Will have a shop around tomorrow, however since my credit has now been searched by the car finance company, will this affect any bank loan application from being accepted?

    lol thanks!

    Anyway, my guess is is that the information not included is that they are giving you a 1 month holiday at the start, therefore that makes the top-up on the remaining monmths.

    Rate looks okay. You said nothing about hire-purchase, so assuming it is a straight loan, looks okay to me for what its worth.

    BTW, if you find that you have been sold some kind of insurance (it WILL be there in the terms if they have, you just have to find it), you might like to know currently 89% of all cases of this retrospectively challenged by the borrower are reimbursed through the financial ombudsmen.

    Enjoy the new motor...after all that's what you're after, not a loan!:)

    Hi
    I'm no expert at calculating credit agreements, but the only way i got to £127 was by ignoring the .5 year in the second half of my calculations:

    (3745*(1.085)^3.5) / (12*(1+1.085+1.177225) = 127.28 per month

    Original Poster

    gerrygedder;5335377

    lol thanks!Anyway, my guess is is that the information not included is … lol thanks!Anyway, my guess is is that the information not included is that they are giving you a 1 month holiday at the start, therefore that makes the top-up on the remaining monmths.Rate looks okay. You said nothing about hire-purchase, so assuming it is a straight loan, looks okay to me for what its worth.BTW, if you find that you have been sold some kind of insurance (it WILL be there in the terms if they have, you just have to find it), you might like to know currently 89% of all cases of this retrospectively challenged by the borrower are reimbursed through the financial ombudsmen.Enjoy the new motor...after all that's what you're after, not a loan!:)



    Will definately look out for the insurance and make sure they remove it .. Other than that, I may just go for the finance offer. Just wanted to make sure I was not being ripped off before I went ahead. Thanks again all the same :thumbsup:

    MrT8064;5335431

    Hi I'm no expert at calculating credit agreements, but the only way i got … Hi I'm no expert at calculating credit agreements, but the only way i got to £127 was by ignoring the .5 year in the second half of my calculations:(3745*(1.085)^3.5) / (12*(1+1.085+1.177225) = 127.28 per month



    Another interesting calculation... Although a bit overwhelming for me :oops: .. Appreciate the help however :-D

    Original Poster

    Thanks guys for all the advice so far. Much appreciated.

    Repped all help.

    ele-font;5335629

    Thanks guys for all the advice so far. Much appreciated.Repped all help.



    Didn't rep my help.....:oops:

    Mustve been rubbish help :-D :w00t:
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