Why flat rates mislead
A flat rate is charged on the full amount for every year, even though you repay part of it monthly. The reducing-balance APR is the honest comparison.
A 6% flat rate over four years is roughly an 11.5% APR, so a quote at 11% reducing balance can be cheaper.
Worked example
£15,000 at a 6% flat rate over 48 months costs £387.50 a month and £3,600 of interest. The equivalent APR is 11.54%.
The same loan at 11% reducing balance costs £387.68 a month and £3,608.78 of interest, so the flat deal is £8.78 cheaper here.
How to compare
Ask for the APR on every quote and compare totals, not payments. A small difference in APR is a small difference in cost.
Check fees too; they are part of the APR.
Inputs for the car loan reducing EMI calculator
Amount borrowed
The amount financed.
Flat rate quoted
The flat rate charged on the full amount each year.
Term
The number of monthly payments.
Reducing-balance rate to compare
A reducing-balance rate offered elsewhere.
CALCULATOR QUESTIONS
Car loan reducing emi calculator questions
What is a 6% flat rate in APR terms?
About 11.54% over four years.
Which is cheaper in the example?
The flat deal, by £8.78, because the reducing rate is slightly above the equivalent APR.
Why compare totals?
Monthly payments can look similar while total interest differs.
Do fees change the answer?
Yes. Add fees to the amount or compare the APR, which includes them.