Flat rates on car loans
A flat rate charges interest on the original amount for the whole term, even as you repay. Because you owe less over time, the true rate on the money you actually still owe is much higher, roughly double for typical terms.
Worked example
£15,000 at a 4.5% flat rate over 48 months costs £2,700 in interest: £368.75 a month, £17,700 in total. The true APR is about 8.7%.
Compare APRs
In the UK, car finance quotes must show the APR. Use it, not the flat rate, to compare deals.
Inputs for the calculator car loan using flat rate
Amount borrowed
The amount of the loan.
Flat interest rate (per year)
The flat rate you've been quoted, charged on the original amount for the whole term.
Term
How many months the loan lasts.
CALCULATOR QUESTIONS
Flat rate car loan calculator questions
How do I calculate a flat-rate car loan?
Interest = amount × flat rate × years; add it to the amount and divide by the months.
Is a 4.5% flat rate cheap?
It's equivalent to an APR of about 8.7% over 48 months.
Why compare APRs?
Because flat rates make loans look much cheaper than they are.
Can I pay off a flat-rate loan early?
Check how interest is refunded; some flat-rate loans refund less than you'd expect.