Christian and Beccy

iTrader: (14)

Daytime telly is fucking mental. Tons of ads for gold companies that want to pull your pants down and rob your old gold from you, but get a load of this. I was SHOCKED.

http://www.quickquid.co.uk/tv

Check the APR shizzle out at the bottom of the page. :shoc ked:

Holy shit on a stick.

Chip

iTrader: (3)

As discussed on here many many times, it just sounds bad cause its so short term.

If I leant you a tenner today for fuel to get home and said tomorrow pay me it back and buy me a pint for interest, it would be a much higher rate than the one advertised.

APR is a meaningless figure on such a short loan!

Rich_bloor

so if you want a grand off em you will pay back 235 grand ???

hmm...

Mike C

iTrader: (1)

errrrm.... no.

Chip

iTrader: (3)

No, you would pay back 1200 pounds

Which just goes to show how confusing a term APR is on a short term loan to someone who knows utterly nothing about finance like yourself!

It really is a meaningless figure on such a short term loan!

Rick

PMSL, so many people fail to understand how this works!

Thrush

iTrader: (1)

I also fail to understand it!

Seriously, I don't get APR and shit - anyone offer a proper laymans explanation of it?

Christian and Beccy

iTrader: (14)

Well, I thought about it for about 5 seconds before posting this. I know they have to publicise the APR, but you'd have thought they would come up with some play on words or something to smooth it over. Can you imagine any of the idiots that watch daytime TV having the sense to look any further than the 2000% APR and not looking any harder. OK, so some people are desperate, but how many are THAT desperate to look harder at something that initially looks SO unappealing?

Chip

iTrader: (3)

Annualised Percentage Rate.

Basically it is a calculation to express as a percentage what the loan is costing you per year, and it has to include ALL fees in that too.

So if I lend you a tenner and you pay me back 15 quid a year later, thats 50% interest per year.
If you pay me the 15 quid back sooner, then the APR is higher, if you pay me back after a month for example, its going to be 600% instead as its saying thats what you would be paying per year if you kept borrowing and paying back continually for the year at the rate of 5 pounds in fees per month.

So for any small value loan (like my tenner example) fees of even a fiver make it look very expensive even on a yearly basis, and the shorter the term the more ridiculous it looks.

When you finance a car the fixed fees might be say 100-200 quid, but as that is such a tiny amount relative to the sum borrowed it will have less effect on the APR compared to the interest itself, and even less so as its over 3 years, so only equates to a few quid a month

CossieRich

iTrader: (1)

Chip to the rescue again with layman terms. Nice one old bean

Chip

iTrader: (3)

The laws are very strict, this is one of the things that I do for a living and there are rules right down to governing the size that the APR must appear on the page relative to all other text present as part of the calculation.
If you go and do a finance example on the toyota website, you will see that Ive set the APR figure to be 50% bigger than all other text as part of the calc when the results come back, thats not because its something that we massively want to promote, its because by law we have to make it that size.