APR do you really understand it?

[TheHound]

sidicks said:

TheHound said:

But the APR in this example is 35%, thats not an easy calcculation and doesn't really mean anything apart from a comparison against other APR figures.

Wrong!! It may not be an easy calculation (for most people), but it's an important one as it shows the true cost (interest rate) of the loan.

TheHound said:

For most people quoting 35% APR is very confusing for basically working out that you would pay £20 intrest on the £100 quid loan . However saying a flat rate of 20% on £100 over the year, is therefore easy to work out the cost of finance is £20.

Easy to work out, but not meaningful as a means to assess whether the loan offers a good deal or not.

TheHound said:

However, as has been said above you only really need to look at two things, how much you are going to borrow and the total cost of borrowing this amount. Surely that is the easiest and best way of finding the best finance option available

No! As explained above (and every time the topic comes up on this forum) - to understand the 'best value' finance option you need to work out the true cost of the loan i.e. the effective interest rate being charged, which is the APR.

By failing to incorporate the timing of repayments into the calculation the flat rate calculation is fundamentally flawed.

Not sure which is more surprising - the fact that this topic keeps cropping up or the fact that people will respond to it while blatantly not understanding the issues!

Edited by sidicks on Sunday 25th January 08:39

WRONG....NO...WRONG

To understand the best value all you ultimately need to know is on what deal you will be paying the least in interest (obviously assuming same length of term) Surely people will look at this rather than a fking APR rate which makes no real sense apart from to confuse people.

Edited by TheHound on Sunday 25th January 17:15

[sidicks]

TheHound said:

To understand the best value all you need to know is on what deal you will be paying the least in interest (obviously assuming same length of term)

As explained by me (and others) you clearly don't understand what you are talking about. You ignore the timing of repayments, which is fundamental in understanding the true cost of a loan.

If you are so confident in your claims, let's enter into the following agreement.

I'll lend you £1,000 at 20% flat rate over 2 years.
The repayments for the loan are £1,300 in one month and £100 in 2 years.

At the same time, you can lend me £1,000 at 20% flat rate over 2 years.
The repayments for the loan are £100 in 1 month and £1,300 in 2 years.

By your logic you think this is a fair deal...

TheHound said:

Surely people will look at this rather than a fking APR rate which makes no real sense apart from to confuse people.

It makes sense to those who understand it - and clearly it makes no sense to those who have no clue. People such as yourself!

It's certainly best for all concerned if 'you're out' if you are going to provide misleading 'advice'.

[TwigtheWonderkid]

TheHound said:

WRONG....NO...WRONG

To understand the best value all you ultimately need to know is on what deal you will be paying the least in interest (obviously assuming same length of term) Surely people will look at this rather than a fking APR rate which makes no real sense apart from to confuse people.

As you're playing Dragons' Den, I'll better Sidicks offer. I'll lend you the money on the above terms he quoted at 19%, and you can lend me the money at 20%. That way, according to you, you're up on the deal.

Edited by TwigtheWonderkid on Sunday 25th January 09:37

[sidicks]

TwigtheWonderkid said:

As you're playing Dragons' Den, I'll better Sidicks offer. I'll lend you the money on the above terms he quoted at 19%, and you can lend me the money at 20%. That way, according to you, you're up on the deal.

Edited by TwigtheWonderkid on Sunday 25th January 09:37

Not only am I going to match your deal, I'll make it for £100k, not £1k - that way he can make 100 x the "profit"...!!

Edited by sidicks on Sunday 25th January 10:12

[TheHound]

sidicks said:

TwigtheWonderkid said:

As you're playing Dragons' Den, I'll better Sidicks offer. I'll lend you the money on the above terms he quoted at 19%, and you can lend me the money at 20%. That way, according to you, you're up on the deal.

Edited by TwigtheWonderkid on Sunday 25th January 09:37

lets use an example to back me up...

both 36 month loan
Loan 1- 10K - total pay back £10,500
Loan 2 - 10k - total pay back £11,600

Loan 1 is the best - APR is irreleavnt (why I haven't bothered to work it out)!!!! as I said, all that ultimately matters is the one you pay the least back on surely!


As for your example not really worth the hassle but I would take you up on the the 19% offer as you have not stipulated which month the £100 would be payable just "1 month" - how about I opt month 23!!!

[sidicks]

TheHound said:

lets use an example to back me up...

both 36 month loan
Loan 1- 10K - total pay back £10,500
Loan 2 - 10k - total pay back £11,600

Loan 1 is the best - APR is irreleavnt (why I haven't bothered to work it out)!!!! as I said, all that ultimately matters is the one you pay the least back on surely!

You quoting the same nonsense doesn't make it any less nonsense. It is impossible to determine which is the best without knowing the repayment terms i.e. without calculating the APR.

Let's say Loan 1 requires a payment of £10,499 on day 2 and a final payment of £1 at the end of the third year.
Let's say Loan 2 requires a payment of £11,600 at the end of the third year.

You still think Loan 1 is the best?!

The Hound said:

As for your example not really worth the hassle but I would take you up on the the 19% offer as you have not stipulated which month the £100 would be payable just "1 month" - how about I opt month 23!!!

Obviously "after 1 month" means in 1 months' time.


You still don't understand why you are wrong? Really?

Edited by sidicks on Sunday 25th January 10:38

[TheHound]

sidicks said:

TheHound said:

lets use an example to back me up...

both 36 month loan
Loan 1- 10K - total pay back £10,500
Loan 2 - 10k - total pay back £11,600

Loan 1 is the best - APR is irreleavnt (why I haven't bothered to work it out)!!!! as I said, all that ultimately matters is the one you pay the least back on surely!

You quoting the same nonsense doesn't make it any less nonsense. It is impossible to determine which is the best without knowing the repayment terms i.e. without calculating the APR.

Same nonsense ...so you would rather pay an extra £1100 over 36 months ... Duh Duh Duh ...Cartman! and your giving advice...

The Hound said:

As for your example not really worth the hassle but I would take you up on the the 19% offer as you have not stipulated which month the £100 would be payable just "1 month" - how about I opt month 23!!!

Obviously after 1 month means in 1 months' time.


You still don't understand why you are wrong? Really?

Edited by sidicks on Sunday 25th January 10:32

Your failure for defining the terms correctly...DUH DUH DUH

[TheHound]

I was always taught never to argue with a stupid person/nutter/retard as they will always bring you down to their level and then beat you on experience.

Bye Bye

[sidicks]

TheHound said:

Same nonsense ...so you would rather pay an extra £1100 over 36 months ... Duh Duh Duh ...Cartman! and your giving advice...

The fact that you would choose Loan 1 over Loan 2 in the example I gave just demonstrates how little you understand.

The Hound said:

Your failure for defining the terms correctly..

My mistake for assuming a basic level of comprehension on your part. I assumed that you couldn't be as bad with words as you obviously are with numbers..!!

[sidicks]

TheHound said:

I was always taught never to argue with a stupid person/nutter/retard as they will always bring you down to their level and then beat you on experience.

Bye Bye

You've repeatedly proved that you don't understand what you are talking about. And I suggest you don't try and compare our respective qualifications for this stuff - you'd lose hands down!

You still sticking with loan 1 over loan 2..??!!


Probably best if you are stepping away from this thread before you make yourself look an even bigger fool than you've already done!

Edited by sidicks on Sunday 25th January 10:54

[TheHound]

sidicks said:

TheHound said:

Same nonsense ...so you would rather pay an extra £1100 over 36 months ... Duh Duh Duh ...Cartman! and your giving advice...

The fact that you would choose Loan 1 over Loan 2 in the example I gave just demonstrates how little you understand.

The Hound said:

Your failure for defining the terms correctly..

My mistake for assuming a basic level of comprehension on your part. I assumed that you couldn't be as bad with words as you obviously are with numbers..!!

I can't resist (my fault)

but this is what I said
"lets use an example to back me up...

both 36 month loan
Loan 1- 10K - total pay back £10,500
Loan 2 - 10k - total pay back £11,600"

So yes I would OBVIOUSLY take loan 1...

Going on this I take it you did ok in the "would you like fries with that" exam when taking your qualifications

Christ no wonder the country has serious problem with finance if people would choose to pay an extra £1100 for the same loan.

Mongtards!

[sidicks]

TheHound said:

I can't resist (my fault)

but this is what I said
"lets use an example to back me up...

both 36 month loan
Loan 1- 10K - total pay back £10,500
Loan 2 - 10k - total pay back £11,600"

So yes I would OBVIOUSLY take loan 1...

Going on this I take it you did ok in the "would you like fries with that" exam when taking your qualifications

Christ no wonder the country has serious problem with finance if people would choose to pay an extra £1100 for the same loan.

Not the same loan, as confirmed in my example.

You gave no details about the repayment terms, hence there was insufficient information to make a decision.

I used your examples and simply provided an (extreme) repayment profile which shows that you'd have to be a fool to choose Loan 1 in this example. As the APR would confirm.

So, to confirm, you'd still choose Loan 1 in my example as the total amount repaid is lower..?

[TheHound]

sidicks said:

So, to confirm, you'd still choose Loan 1 in my example as the total amount repaid is lower..?

Think you'll find you edited your post after the fact to "support" your argument... by adding that extra crap to your argument about the loan effectively being paid back after 2 days.

[sidicks]

TheHound said:

Think you'll find you edited your post after the fact to "support" your argument... by adding that extra crap to your argument about the loan effectively being paid back after 2 days.

So it's not only about how much is repaid, it's about the timing of the repayments too?

Which is what the APR takes into account..

I win, you lose!

[TheHound]

sidicks said:

So it's not only about how much is repaid, it's about the timing of the repayments too?

Which is what the APR takes into account..

I win, you lose!

Win????? You decietfully changed your post after my response (10.38) to try and win your argument, ... Yes you do win at several things

Scum Bag
Douche


Well done!!!!

I seriously hope you are not such as devious scum bag when dealing with cleints...

[sidicks]

TheHound said:

Win????? You decietfully changed your post after my response (10.38) to try and win your argument

You will see that the time I edited my post (before I saw your reply) was exactly the same time you were postng - I wasn't 'deceitfully changing my post' I was simply editing it to make it 100% clear why your claims were wrong by using an example.

You've repeatedly (falsely) claimed that you only need to know the total amount of interest paid and the term to determine which loan is best, and then using this to try and justify why you believe APR is not relevant.

You sound like the sort of person who would borrow at 4% flat to invest at 5% APR and think they were making a profit. And then insult other people trying to explain why you are wrong!

TheHound said:

I seriously hope you are not such as devious scum bag when dealing with cleints...

Helping people understand finance is why I respond to these threads to try and avoid them being misled by people you you who know much less than they think they do!

This issue is particularly important when comparing loans and PCPs!

I seriously hope that your business involves things that you understand (and therefore not finance)!!

Edited by sidicks on Sunday 25th January 11:55

[2 sMoKiN bArReLs]

Ooooh, handbags at dawn!

[sidicks]

2 sMoKiN bArReLs said:

Ooooh, handbags at dawn!

Not really - he'd already lost the argument when he repeatedly claimed that APR is irrelevant and all you need to know is the total amount paid!

The fact that he then tried to pretend he was more qualified than me and started with the insults was just the icing on the cake...

[TwigtheWonderkid]

TheHound said:

but this is what I said
"lets use an example to back me up...

both 36 month loan
Loan 1- 10K - total pay back £10,500
Loan 2 - 10k - total pay back £11,600"

So yes I would OBVIOUSLY take loan 1...

But the above says nothing about when the payments are due. That's the point I and others are making. Some loans are paid in equal monthly instalments, some loans are part paid monthly with a balloon payment at the end, and some loans you pay nothing at all during the period and the whole amount at the end (like a payday loan).

Please tell me, in a way that an idiot like me can understand, how you are going to express the difference between 2 loans, both for £10K, both repaying £10500, both over 36 months, but one loan paying in equal monthly instalments and the other paying nothing until the end of the 36 months and then the whole amount is repaid in full.

I assume you can see that option 2, paying nothing until the end, is better than option 1, equal monthly payments. How will you express that given the loan period and the amount repaid are identical??

[2 sMoKiN bArReLs]

sidicks said:

2 sMoKiN bArReLs said:

Ooooh, handbags at dawn!

Not really - he'd already lost the argument when he repeatedly claimed that APR is irrelevant and all you need to know is the total amount paid!

The fact that he then tried to pretend he was more qualified than me and started with the insults was just the icing on the cake...

Yes, I meant his girly outburst rather than your reasoned explanation