Finance - flat vs APR. Help needed.
Discussion
We're negotiating on a car for my wife.
The vehicle is £18.5k. We're putting down £6k. The GFV of the vehicle after 48 months is £7200.
There is a £150 arrangement fee at the start, added to the first payment.
47 payments of £180.
Final payment assuming we buy it at the end will need to have £150 added to it including the option to purchase fee.
We've been told that the rate is 3.25% flat.
However, the APR is 9.1% and the total interest payable is around £3200.
I can't seem to figure out how on earth the APR is so high given the flat rate.
Any help!?!?
FWIW this is through BMW finance. We've agreed to buy it but no money has changed hands yet and nothing has been signed.
The vehicle is £18.5k. We're putting down £6k. The GFV of the vehicle after 48 months is £7200.
There is a £150 arrangement fee at the start, added to the first payment.
47 payments of £180.
Final payment assuming we buy it at the end will need to have £150 added to it including the option to purchase fee.
We've been told that the rate is 3.25% flat.
However, the APR is 9.1% and the total interest payable is around £3200.
I can't seem to figure out how on earth the APR is so high given the flat rate.
Any help!?!?
FWIW this is through BMW finance. We've agreed to buy it but no money has changed hands yet and nothing has been signed.
It's not 3.25% flat rate - that's about 4.5% flat rate. I'm a introducer for BMW Finance BTW. I suspect they're looking at the computer screen which shows the base rate at 3.25%, not the rate sold to you.
APR is typically around double the flat rate on a hire purchase / PCP type deal - take into account document fees and the fact that you're paying a fixed amount of interest that doesn't reduce in line with the capital reduction (it's nice and complicated!)
APR is typically around double the flat rate on a hire purchase / PCP type deal - take into account document fees and the fact that you're paying a fixed amount of interest that doesn't reduce in line with the capital reduction (it's nice and complicated!)
This isn't what you want to hear, but you can buy a nice car for £6,000 or so, and it will certainly last you 4 years with maintenance costs very substantially lower than £180 a month (£2,160 p.a!)
My tip would be to buy something German or Japanese with a good reputation and stick a £1,000 dateless number plate on it. Your friends and neighbours won't have a clue whether the Golf (or whatever) is new, old, cheap or expensive. And you'll save yourselves ££ thousands which the wife can spend on clothes.....
My tip would be to buy something German or Japanese with a good reputation and stick a £1,000 dateless number plate on it. Your friends and neighbours won't have a clue whether the Golf (or whatever) is new, old, cheap or expensive. And you'll save yourselves ££ thousands which the wife can spend on clothes.....
Ozzie Osmond said:
This isn't what you want to hear, but you can buy a nice car for £6,000 or so, and it will certainly last you 4 years with maintenance costs very substantially lower than £180 a month (£2,160 p.a!)
My tip would be to buy something German or Japanese with a good reputation and stick a £1,000 dateless number plate on it. Your friends and neighbours won't have a clue whether the Golf (or whatever) is new, old, cheap or expensive. And you'll save yourselves ££ thousands which the wife can spend on clothes.....
I already have a cheap and reliable japanese car - my £900 avensis that i service myself and will run until it dies.My tip would be to buy something German or Japanese with a good reputation and stick a £1,000 dateless number plate on it. Your friends and neighbours won't have a clue whether the Golf (or whatever) is new, old, cheap or expensive. And you'll save yourselves ££ thousands which the wife can spend on clothes.....
My wife travels all over the country and wants a nice car for herself. She's paying for it.
rfoster said:
It's not 3.25% flat rate - that's about 4.5% flat rate. I'm a introducer for BMW Finance BTW. I suspect they're looking at the computer screen which shows the base rate at 3.25%, not the rate sold to you.
APR is typically around double the flat rate on a hire purchase / PCP type deal - take into account document fees and the fact that you're paying a fixed amount of interest that doesn't reduce in line with the capital reduction (it's nice and complicated!)
Even if it's 4.25%, how on earth does a £12500 sum borrowed result in an interest charge over the period of £3200?!APR is typically around double the flat rate on a hire purchase / PCP type deal - take into account document fees and the fact that you're paying a fixed amount of interest that doesn't reduce in line with the capital reduction (it's nice and complicated!)
3200/12500 = 25.6% / 4 = 6.4%
I've read that the flat rate is applied twice to the balloon payment. Is that so?
Ozzie Osmond said:
This isn't what you want to hear, but you can buy a nice car for £6,000 or so, and it will certainly last you 4 years with maintenance costs very substantially lower than £180 a month (£2,160 p.a!)
My tip would be to buy something German or Japanese with a good reputation and stick a £1,000 dateless number plate on it. Your friends and neighbours won't have a clue whether the Golf (or whatever) is new, old, cheap or expensive. And you'll save yourselves ££ thousands which the wife can spend on clothes.....
Why do these posts always get responses like this, really pees me off. The OP is asking a straight forward question just answer it. Oh and when has blowing £1000 on a number plate that would probably be worth about £200 been sound financial advice?My tip would be to buy something German or Japanese with a good reputation and stick a £1,000 dateless number plate on it. Your friends and neighbours won't have a clue whether the Golf (or whatever) is new, old, cheap or expensive. And you'll save yourselves ££ thousands which the wife can spend on clothes.....
crostonian said:
Why do these posts always get responses like this, really pees me off. The OP is asking a straight forward question just answer it. Oh and when has blowing £1000 on a number plate that would probably be worth about £200 been sound financial advice?
Yeah it's annoying isn't it.She's worked for 10 yrs to get qualified and chartered.
During that time she's seen me blow lots of cash on nice cars and racing. In the meantime she's put up with whatever car has fitted our joint needs.
f
k it, she's earnt it.Ozzie Osmond said:
If she's happy giving the bank 10% of her money each year for 4 years that's absolutely fine by me. I guess somebody has to keep the bankers in their fat salaries. 
Must be nice not having a mortgage. Suppose it gives you more time to answer questions that weren't asked in the first place.dapearson said:
We're negotiating on a car for my wife.
The vehicle is £18.5k. We're putting down £6k. The GFV of the vehicle after 48 months is £7200.
.
Is the it a new bmw car or 2nd hand bmw? (also which model?)The vehicle is £18.5k. We're putting down £6k. The GFV of the vehicle after 48 months is £7200.
.
I would of thought the the interest wis cheaper on a new one and the the cost of borrowing on a 2nd hand one is more expensive.(new is manufactured subsidised)
It maybe cheaper just o to get a personal loan (you only pay interest on the outstanding capital)
It's only an idea, but with personal loan interest rates the way they are now if your OH can stretch to another £100 a month you can have the loan completely paid off after four years and have paid £1720 in interest not £3k.
Even if you're constrained by the monthly repayments taking the loan out over seven years will still give you £180 a month repayments and save you money on interest (£2200ish interest over seven years, but if you pay it back after four you won't have to pay all the interest)
Even if you're constrained by the monthly repayments taking the loan out over seven years will still give you £180 a month repayments and save you money on interest (£2200ish interest over seven years, but if you pay it back after four you won't have to pay all the interest)
Thanks for the input guys.
It's on a used Mini. 8 months old, so not on heavily subsidised finance.
Annoyingly (!) the same dealer has come back with a very competitive offer on a new M135i. The interest charge for the 4 yrs is the same as that of the Mini. GFV is higher (obv). APR is half that of the Mini. Monthly payment is £70 more for a car costing £10k more.
I have some thinking to do...
It's on a used Mini. 8 months old, so not on heavily subsidised finance.
Annoyingly (!) the same dealer has come back with a very competitive offer on a new M135i. The interest charge for the 4 yrs is the same as that of the Mini. GFV is higher (obv). APR is half that of the Mini. Monthly payment is £70 more for a car costing £10k more.
I have some thinking to do...
dapearson said:
Thanks for the input guys.
It's on a used Mini. 8 months old, so not on heavily subsidised finance.
Annoyingly (!) the same dealer has come back with a very competitive offer on a new M135i.
I have some thinking to do...
If it were I my thinking would be briefer than a brief thing wearing briefs ..It's on a used Mini. 8 months old, so not on heavily subsidised finance.
Annoyingly (!) the same dealer has come back with a very competitive offer on a new M135i.
I have some thinking to do...
2.5pi said:
dapearson said:
Thanks for the input guys.
It's on a used Mini. 8 months old, so not on heavily subsidised finance.
Annoyingly (!) the same dealer has come back with a very competitive offer on a new M135i.
I have some thinking to do...
If it were I my thinking would be briefer than a brief thing wearing briefs ..It's on a used Mini. 8 months old, so not on heavily subsidised finance.
Annoyingly (!) the same dealer has come back with a very competitive offer on a new M135i.
I have some thinking to do...
Wife's car. She's paying. She prefers the mini. I prefer the M135i. Even if i offer to pay the difference, she's paying for "my" car.
Good grief. What a dilemma!
Gassing Station | General Gassing | Top of Page | What's New | My Stuff