• APR Explained

APR Explained

Understanding Annual Percentage Rates on Car Loans

A big part of providing the entire car buying experience here at West Motors s offering used car finance which is something so many of our customers take advantage of. It is a popular way to spread the cost of your next car using a deposit to secure the finance, followed up by monthly instalments. Instrumental in the finance process is understanding APR (Annual Percentage Rate) which is an acronym used frequently in advertising and literature associated with finance, and car finance is no exception. It can take a little while to get your head around, which is why we’re here to explain what APR is, and how it relates to the financing of your next used car. 

What is APR? 

First, let’s explain what it stands for. APR means Annual Percentage Rate, and is used to show the true cost of a loan, which is essentially what car finance is. The figure, always shown as a percentage, represents the interest charged on the amount, plus any fees. 

What’s important to note is that the higher the APR rate, the more you’ll end up repaying. APR is calculated using a standard process, so it’s a good way for consumers to compare deals. 

How is APR calculated? 

To put it simply, the loan amount, fees and applicable interest are combined. The periodic interest rate is multiplied by the number of periods in a year. 

The APR rate is added on top of your loan amount, and bingo  that’s how much you’ll repay. 

What is the difference between representative and personal APR?

Representative APR 

This is something that all lenders must include in their advertising, so that applicants have an idea of what to expect. This is the figure that the lender expects will apply to more than half of applicants - therefore it is a representative figure. 

Personal APR

This figure is all about you. This figure is arrived at by taking your credit score and personal financial circumstances into account, and is added to your quote. It could well be different to the representative APR rate, so be prepared for that.

How does APR work on used car finance? 

When comparing used car finance, you should use the APR rate as a factor in your decision-making; when you see an APR rate on your used car finance quote, you know that interest and fees have been taken into account, so you can use it to sniff out a good deal. 

On new cars, you will often find 0% finance offers. To manage your expectations, this is very rarely the case in used car finance, but you do obviously still benefit from the lower prices that used cars bring with them. 

As with all types of finance, make sure you pay attention to the APR rate as opposed to just the interest rate, in order to get a real idea of what you’re going to be paying. 

Financing your next car at West Motors 

APR is just one of the important terms to get to grips with when you’re looking to spread the cost of your next car - there are a fair few, which is why we’ve explained them in this article. It’s so important to us that you not only feel well informed about the finance you’re taking out, but happy with it too, so we make sure we explain the process at your pace. 

Before we get into the nitty gritty of your finance deal though, you’ll need to choose the used car first - and we’ve got a pretty healthy selection for you! Get shopping in our online showroom - and use our handy finance calculator to get an idea of monthly costs.  

To save timely negotiation all our cars are heavily discounted upfront and offered nearer cost price, saving customers up to £2000 when compared to our competition. This ensures we are treating every customer the same. This fee is a compulsory fee and applies to all customers.

Variable admin fee is charged as listed below:

  1. Retail customers pay £199.
  2. Repeat customers purchasing a 2nd car within 12 months of the original invoice date £0
  3. Retail customers arranging finance using brokers outside of our immediate panel of lenders £499
  4. Trade customers making a purchase as the motor trade £549
  5. Export customers including Northern Ireland and the Republic of Ireland £599