JOhn, am not having a pop but according to your pdf, and to clarify there is nothing wrong with my maths.
Fiat is taking the 3% on the £13006 ( sum less deposit ) and not including the final payment option of 285.
in reality the interest of £549 should be based on the actual borrowed sum of 7456 which is the calculated from 14451 less deposit less final sum to be paid. This is the true figure that is being financed. Based on that you arrive at £229 a month total of 8017 which is 4.9% APR.
What is not being made clear here is that the 5520 to be paid if you wish to take the car after 36 months is not financed so there is no interest on it.
however just to confuse the issue even further, should you take the 13,006 of the car and the Then sum of interest plus final payment option which is £834 against the price of the car 13,006 it then works out at 4.19 APR, that for me is the real figure here.
The sum financed is the cost of the car less the deposit. If you want to own the car at the end of the contract you have to pay the GMFV + the final payment option. The repayment of the amount that is the GMFV, instead of being spread over the length of the contract, is deferred and interest is charged on it.
The APR is calculated using a formula that takes into account the number of repayments, the interest charged and any other costs involved including the final payment option. It is not the rate you pay, it is merely there to enable the consumer to make a comparison.
woah, Scorosso, you saying they are charging you interest on something that you may or may not take?
Hi Dan, I can see where you're coming from but in John's example when you take delivery of the car, you're doing so with a loan from Fiat for £13,006 and interest is payable on that full amount. Whether you choose to pay the GMFV at the end of the term and keep the car, or not, you've still had the use of that money for the last three years. I've even come across instances where the buyer has been able to re-finance that final payment for a further term !!
Chris.
