Enter the price of the car, your deposit, the term and the rate on the quote. You get the monthly payment, the total charge for credit, the total amount payable and the APR, with every step of the working. For hire purchase it also shows half the total amount payable: the point at which the law lets you hand the car back.
Start from the price and the deposit
The amount borrowed is the price of the car less your deposit, part-exchange included. With a personal loan the car is yours from the start. With hire purchase (HP) the car is hired to you, and it only becomes yours once you have kept to the agreement, usually by paying the final payment or an option-to-purchase fee.
Choose the rate on the quote
The APR (annual percentage rate) counts the interest and the compulsory fees: it is the figure to compare between quotes. With an APR, the calculator assumes the whole cost is in the monthly payments, with no separate fee: if there are fees, the real payments are a little lower. A nominal rate counts interest only, so add any arrangement, documentation or option-to-purchase fee and the calculator works out the APR, counting the fees as paid at the start. A quote may also give a flat rate, with interest charged on the whole amount for the whole term; the calculator shows the APR that comes to.
Hire purchase: the half-way point
Under the Consumer Credit Act 1974 you can end a hire purchase or conditional sale agreement at any time before the final payment falls due. You then owe whatever brings your payments up to half the total amount payable, deposit and fees included, unless the agreement asks for less, plus the cost of any damage beyond reasonable care. This rule applies across the UK. It does not apply to a personal loan.
Rounding
Monthly payments are rounded to the nearest penny, with halves rounded up. The final payment clears the loan exactly, so it can differ from the others by a few pence. Copy the result, export it as a CSV file or save it to Priostack.
Amount borrowed: C = price − deposit.
With a nominal rate N, the monthly rate is i = N ÷ 12; with an APR A, i = (1 + A)^(1/12) − 1.
Monthly payment = C × i ÷ (1 − (1 + i)^−n), where n is the number of payments.
With a flat rate F: interest = C × F × n ÷ 12, and the monthly payment = (C + interest) ÷ n.
APR: the yearly rate X at which C − fees equals the sum of the payments, each multiplied by (1 + X)^(−k/12) for month k.
Example: £10,000 over four years at a 4.9% flat rate
A dealer quotes hire purchase on £10,000 at 4.9% flat over 48 months. The interest is £10,000.00 × 4.9% × 4 = £1,960.00, so you repay £11,960.00: 47 payments of £249.17 and a final one of £249.01. That is an APR of 9.45%, nearly twice the flat rate. Half the total amount payable is £5,980.00.
