APR do you really understand it?
Discussion
TwigtheWonderkid said:
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??
Indeed! It also tells you nothing about whether you should borrow at x% flat rate to invest in a project at y% internal rate of return!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??
Edited by sidicks on Sunday 25th January 12:29
2 sMoKiN bArReLs said:
Yes, I meant his girly outburst rather than your reasoned explanation 
All too frequently I read about people having been hoodwinked by a car salesman into believing that they have received a great deal with an apparently low rate of interest, only for it to be shown that this was the misleading 'flat' rate and the informative APR was much more.
Edited by sidicks on Sunday 25th January 14:00
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 f
king APR rate which makes no real sense apart from to confuse people.
I'm Out!!!
I think you need to read up on the 'time value of money' before you comment/argue further.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 f
king APR rate which makes no real sense apart from to confuse people. I'm Out!!!
Edited by TheHound on Sunday 25th January 09:15
Maybe opening a can of worms but see Point 5 ...
http://www.publications.parliament.uk/pa/cm201314/...
This actually supports both sides of the argument but don't you think it is interesting they are saying APR is misleading.
http://www.publications.parliament.uk/pa/cm201314/...
This actually supports both sides of the argument but don't you think it is interesting they are saying APR is misleading.
TheHound said:
Maybe opening a can of worms but see Point 5 ...
http://www.publications.parliament.uk/pa/cm201314/...
This actually supports both sides of the argument but don't you think it is interesting they are saying APR is misleading.
The issue (referred in your link) with APR concerns its usefulness for borrowing of less than 12 months. This is therefore irrelevant for the examples you quoted in this thread and hence does not support your claims at all.http://www.publications.parliament.uk/pa/cm201314/...
This actually supports both sides of the argument but don't you think it is interesting they are saying APR is misleading.
Regardless of the term, the APR shows the effective interest rate bring charged (and hence the true cost of the loan). Of course, in order to quote an annual rate for short term loans, it has to be assumed that the loan would be rolled over and over for a period of 12 months, and hence quite reasonable £ fees can equate to a very high APR.
sidicks said:
The issue (referred in your link) with APR concerns its usefulness for borrowing of less than 12 months. This is therefore irrelevant for the examples you quoted in this thread and hence does not support your claims at all.
My claim that APR can be misleading and confuse the average person ...I guess not! 
TheHound said:
My claim that APR can be misleading and confuse the average person ...I guess not!
You actually claimed it was meaningless!It has certainly confused you, but despite the evidence to the contrary, you appear to believe that you are 'above average'..!
Edited by sidicks on Sunday 25th January 14:46
TwigtheWonderkid said:
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??
The Hound, any chance of you answering this question? 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??
TwigtheWonderkid said:
TwigtheWonderkid said:
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??
The Hound, any chance of you answering this question? 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??
sidicks said:
I wanted to clarify the situation - it appears that not only were you confused about APRs, you were also confused about what you actually previously claimed in this thread!!
You are not clarifying that point at all and by the way I have said in this very thread "APR can be very misleading" I am obviously very confused about what I said...
I must also have been very confused when I called you a (childish I know but hey ho) In answer to your friend;
I would express it as a £10k loan with £500 intrest due with both amounts to be paid in one lump sum at the end of the term.
I would agree with him that the second option would be more benficial to me but not necessarily to everyone. For example those that are not so good at budgeting and saving up to be able to pay off £10.5k in a lump at the end but could easily "afford" and manage to pay the £291.67 a month.
TheHound said:
You are not clarifying that point at all and by the way I have said in this very thread "APR can be very misleading"
Only for loans of less than 12 months, which were never under discussion in the first place.TheHound said:
I am obviously very confused about what I said... I must also have been very confused when I called you a (childish I know but hey ho)
Rather than admit you were wrong, you resort to insults. How dull, I must also have been very confused when I called you a (childish I know but hey ho) TheHound said:
I would express it as a £10k loan with £500 intrest due to be paid in one lump some at the end of the term.
I would agree with him that the second option would be more benficial to me but not necessarily to everyone. For example those that are not so good at budgeting and saving up to be able to pay off £10.5k in a lump at the end but could easily "afford" and manage to pay the £291.67 a month.
The question was about determining which loan was best value NOT which loan might suit those who can't budget very well...I would agree with him that the second option would be more benficial to me but not necessarily to everyone. For example those that are not so good at budgeting and saving up to be able to pay off £10.5k in a lump at the end but could easily "afford" and manage to pay the £291.67 a month.
Nice try at moving the goalposts though...
TheHound said:
I would express it as a £10k loan with £500 intrest due with both amounts to be paid in one lump sum at the end of the term.
It's not very catchy, is it?TheHound said:
I would agree with him that the second option would be more benficial to me but not necessarily to everyone. For example those that are not so good at budgeting and saving up to be able to pay off £10.5k in a lump at the end but could easily "afford" and manage to pay the £291.67 a month.
Oh Jesus Titty fking Christ. That's it, I give up. Towel thrown in.
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