APR calculation

Motor insurance premium of £163.20 per year payable in full or by 1 x £ 42.64 and 10 x £20.13.....total £243.94.
Seems an exorbitant amount of interest?
Reply to
rasta.pickles
That was my question (although I made a mess of it).....there wasn't an APR quoted that I could see?
But £80 on a £160 loan over a year is going to put it into three figure s I'd imagine.
Reply to
rasta.pickles
There has to be, by law.
A tidge under 50% at a first glance, but it's not that simple.
You aren't borrowing £163.20 for a year. If you were, you'd pay nothing until the end of the year, then pay £163.20 plus the £80.74 interest.
You're paying £42.64 up-front, then borrowing the remainder - which you're repaying over the next 11 months, £20.13 payment each month from the end of the first month. So you're not borrowing anything past 11 months, and you're not borrowing the first £42.64 at all. So the actual APR is a big chunk higher than 50% - but, of course, the original comment applies. There's no legal maximum on the APR - so, if you don't like it, don't take that credit.
Having a quick google for an insurance premium APR calculator doesn't give anything that'll give an exact answer - but paying £20.13 monthly would give just over 95% APR, just a couple of quid shy of your total figure. Your example would be higher, because it has a much lower outstanding balance, due to the larger initial payment moving the last payment to the start.
Reply to
Adrian
Next *ten* intervals. The OP didn't say what the interval was, so it is impossible to calculate the exact APR.
Reply to
David Woolley
wrote:
Take the £42.64 off the £163.20 which means the loan is £120.56 The plug the numers into this site
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Loan amount £120.56, for 10 months loan and interest rate of 127.2%. The calculator gives you 10 monthly payments of £20.13 and total interst of £80.74, which is the amount added to the premium for 10 monthly payments.
HTH
Reply to
brightside S9
Not if the lower price has an introductory discount only available if the premium is paid in full. The higher price is the normal price with a zero charge for paying in instalments.
Reply to
alan_m

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