How to work out your monthly payments
Price of Loan x Total % (Flat rate% x Number of Years) = Interest
+ Price of loan ÷ Total Term (months) = Monthly payment
Borrow £6,000 over 5 years at 7%
£6,000 x 35% (7x5 =35) = £2,100 + £6,000 = £8,100 ÷ 60 months = £135.00 per month
On top of that you will have to pay acceptance fees and admin fees of at least £299.00. This example is an expensive loan! You should be looking at 4% - 5% Flat or if possible 0%. APR’s are roughly double your flat rate. However, shorter the term and lower the loan the Apr will rise!
Don’t ask to him to work the APR out, the formula is horrendous!
How to work out your interest rate
Monthly Payment x Total Term (Months) – Price of Car = Interest ÷ Total Term (Months)
= Total term % x 100% ÷ Total Term (Years) = Flat Rate
Paying £135 per month over 5 years on a £6,000 loan
£135 x 60 = £8,100 - £6,000 = £2,100 interest ÷ 60 = 35% x100% ÷ 5 = 7% Flat
Normally they will be a 0.5% Uplift for business of more than 48 months.