# APR rates on loan - help, please!



## h20 (30 Apr 2007)

Hi,

I'm not very bright with finance things but hope to set things right this year.

I took out a 36-month loan of EUR 1540 with BOI in February 2006.

I pay a monthly standing order of almost EUR 50.

The total amount repayable is EUR 212.48.

The rate of interest is 8.65% (variable).

I have just received my bank statement, which states the following lending rates:

16 Oct 2006   Lending rate to date 9.400%
18 Dec 2006   Lending rate to date 9.650%
20 Mar 2007   Lending rate to date  9.900%

These rates are different to the original 8.65% stated.

By the way, I have a student account.

I was just about to write a letter to the bank complaining about this higher rate, but realised that perhaps I should check with someone less clueless than me first. 

If anyone can help me, great!!!

PS: I also want to know if I would be saving any money by paying the loan off before the end of this year.

Thank you.


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## vol (30 Apr 2007)

As it's a variable rate they're entitled to do that - vary it. Usually up instead of down unfortunately. 

You would save money in interest charges by paying it off early.


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## h20 (30 Apr 2007)

vol said:


> As it's a variable rate they're entitled to do that - vary it. Usually up instead of down unfortunately.
> 
> You would save money in interest charges by paying it off early.




Sounds like I got at a bad deal then. Will try to pay it off asap. Do fixed rate loans exist?


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## vol (30 Apr 2007)

They do, but usually the fixed rate will be a little bit higher than the 'start' rate on the variable, hence most people pick variable hoping they're getting a better deal.


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## MLE (30 Apr 2007)

Have you an account with your local Credit Union ?   If not, it might be worthwhile opening one.   My local credit union charges 8% but they have a special rate of 6.99% for certain categories, such as car loans & student loans.   Rates are fixed.   You do need to save with them for a while before you can borrow, but in my experience, Credit Unions are very easy to deal with, no hidden charges, not as much red tape and you are a member of a co-operative, which gives you the right to vote at the AGM and have a say in the running of the organisation.


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## h20 (30 Apr 2007)

MLE said:


> Have you an account with your local Credit Union ?   If not, it might be worthwhile opening one.   My local credit union charges 8% but they have a special rate of 6.99% for certain categories, such as car loans & student loans.   Rates are fixed.   You do need to save with them for a while before you can borrow, but in my experience, Credit Unions are very easy to deal with, no hidden charges, not as much red tape and you are a member of a co-operative, which gives you the right to vote at the AGM and have a say in the running of the organisation.



Yes, I do, but I never use this account, as I don't live in ireland all the time. Credit unions are not very 'international' in nature.


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## MLE (30 Apr 2007)

h20 said:


> Yes, I do, but I never use this account, as I don't live in ireland all the time. Credit unions are not very 'international' in nature.


 
That's true, but if you have a current account, you can make your repayments by direct debit.


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## h20 (30 Apr 2007)

MLE said:


> That's true, but if you have a current account, you can make your repayments by direct debit.



Oh, I never knew that. Thanks for that tip! ;-)


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## irishpancake (1 May 2007)

vol said:


> They do, but usually the fixed rate will be a little bit higher than the 'start' rate on the variable, hence most people pick variable hoping they're getting a better deal.



Not necessarily true, particularly in the case of Tesco (6.9%APR), [broken link removed] (7.2%APR).

The only drawback would be the minimum loan amount is €2500 with both of the above.


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## vol (5 May 2007)

For the most part it is...hence my saying 'usually' instead of 'always'.


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## 2tavo (10 May 2007)

Hello there!

(my first post here but i've been reading forum fro a while now )

Could someone try to clarify my problem with understanding APR on my car insurance deal? I can't really understand what they are acctualy saying about the APR:

"The cash price of your policy is: €2028.55              (>.<)
 Service chrage: €132.48
 Total amount payable €2161.03"

"Service charge (6.67%):€132.48
This service charge is the equivalent of 19.66% APR. It may be revised at the discretion of XXXXX who will advise you in advance."

So what is the real % on my insurance in the end *confused* why does it say 19.66%??


Thanks,
2tavo


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## asdfg (10 May 2007)

> "The cash price of your policy is: €2028.55 (>.<)
> Service chrage: €132.48
> Total amount payable €2161.03"
> 
> ...


 
The real cost of the "service charge" is the APR. The rate quoted 19.66% appears to be very high in relation to the service charge. Normally the APR is approx double the "service charge". 

The difference is that the service charge does not take into account that you are paying back 1/12 of the original sum each month. The APR does. 

Assuming you are paying back 180.09 pm to the insurance company you could borrow the amount of the insurance from the bank and save yourself approx €45 per annumn €3.75 pm.


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## asdfg (10 May 2007)

Quote:
"The cash price of your policy is: €2028.55 (>.<)
Service chrage: €132.48
Total amount payable €2161.03"

"Service charge (6.67%):€132.48
This service charge is the equivalent of 19.66% APR. It may be revised at the discretion of XXXXX who will advise you in advance."

So what is the real % on my insurance in the end *confused* why does it say 19.66%??


The real cost of the "service charge" is the APR. The rate quoted 19.66% appears to be very high in relation to the service charge. Normally the APR is approx double the "service charge". 

The difference is that the service charge does not take into account that you are paying back 1/12 of the original sum each month. The APR does. 

Assuming you are paying back 180.09 pm to the insurance company you could borrow the amount of the insurance from the bank and save yourself approx €45 per annumn €3.75 pm.


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## 2tavo (10 May 2007)

Hi
Thank you for reply.

I've realized that i didn't give all the information:

I paid a deposit of €432.23
"Amount of credit to be provided inclusive of service charge:€1728.8"

So my monthly repayments are €172.88 x 10 
and i'm already half way there.

I'm sorry but i still don't get what is this 19.66% based on ~.~


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## asdfg (11 May 2007)

The Service Charge is a one off charge and the APR is calc on the reducing balance each month.

When you pay back 172.88 pm the outstanding amount due is reduced after each payment. In order to charge interest of 132.48 (the service charge) on the reducing balance you will be charged an interest rate of the APR 19.66%.  

The insurance company legally has to quote the APR, it is the actual rate you are charged and can be easily compared to other APR rates from the banks, other insurance companies etc.


Many go with the insurance company because of the ease with which the DD is offered by them, to me it is an expensive form of credit, most banks over an APR of approx 8%.

Hope this explains it


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## 2tavo (14 May 2007)

Call me stupid but i still don't get it.

Nothing here calculates for me:

My insurance costs me €2028.55

6.67%*2028.55=135,91
19.66%*2028.55=398.81
I understand this as two option (which probably are wrong >.<):

My insurance would me smaller then €2028.55 if i wouldn't pay by instalments (the 19.66% is included)
or I will have to pay these additional 398.81 in the end
I appriciate your help asdfg on this


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## asdfg (14 May 2007)

> My insurance would me smaller then €2028.55 if i wouldn't pay by instalments (the 19.66% is included)


 
If you could get the money from a bank for instance you could get it for less than 10% APR.

The only additional amount that you have to pay is €132. The service charge of 6.67% is a one off payment calc on the total amount of credit (the insurance premium). This is included in your monthly payments. 

The service charge of 6.67% equates to 19.66% calc on a reduced amount outstanding each month (after each instalment you make) which is the way legally that it is supposed to be calc 



> or I will have to pay these additional 398.81 in the end


 
You don't have to pay anything else


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