FAI finance

[Devil]

I do enjoy having a mate who owns a finance company mmmm 11% no deposit on anything.

[Cajun]

bank loads i get are no deposit as well and rate is only like 14% i think not a great deal.

but mate at fiance comany sounds really handy

[Devil]

I just get "No problem, I know where you live."

[Cajun]

also knows i know you got a motorbike i can take as payment hahahha

[wkid_one]

Just checking whether you are quoting the 'interest rate' or the 'finance rate'??

There is an important difference. With the finance rate, if you are borrowing a small amount of money - the application fee you pay can make the FR look well higher than the interest rate. The bigger the sum or longer the term borrower - the less impact any upfront fee has on finance rates.

Say $3000 with a $300 fee @ 15% interest means and effective finance rate of 21% over 36 months - however if you repay on exactly the same terms over 24 months - the finance rate blows out to 24%.

If you are being charged 27% as an interest rate....tell them to get fucked - you are being shafted plain and simple. Go elsewhere for your finance.

As Oscar mentioned tho, by only borrowing $3k - most larger finance companies like UDC/Marac/Speirs won't touch you as the minimum loan amount is normally $10k or thereabouts, and these are the more cost effective finance companies as they are backed by Bank funding. This means given you are typically going to self funded or debenture funded finance companies - their interest rates are higher. As these companies can only lend money they attract from investors and have no option to buy money from the wholesale market like larger financiers - they have to charge higher interest rates to recoup the money they are offering to the depositors - for which they need to offer higher rates of return in order to entice them to invest.

Try going to a bank like ASB and getting their 'low interest mastercard' - which is only about 13% (however - the fees are high also).

JR is also right - however MOST larger finance companies run their loans like mortgages - whereby you only pay the interest if it acrues and allows you to make lump sum. It is only typically the smaller financiers who charge you the interest up front. THe days of charging the interest rates upfront are number - with more and more finance companies operating their loans no different to your typical housing loan.

Just my thoughts (which will be disparged anyway)......

[Devil]

Wkid One just prompted me for another finance tip. Always enquire if you can make capital repayments without incurring a charge. Most places wont, but some of the shady ones can and do.

[Devil]

also knows i know you got a motorbike i can take as payment hahahha

Absolutely. This is what normally happens when you get finance on a vehicle anyway. The security of the loan usually *IS* the vehicle you are buying.

[Cajun]

Absolutely. This is what normally happens when you get finance on a vehicle anyway. The security of the loan usually *IS* the vehicle you are buying.

Yeah i know, but thats all good

Wkid One just prompted me for another finance tip. Always enquire if you can make capital repayments without incurring a charge. Most places wont, but some of the shady ones can and do.

Well the last thing i brought on fiance was about 4 years ago and that was a farmers frezzer which i took over 1 year and paid off in 2 months, other wise i deal with the bank, its good knowning the bank manager, i just tell him i want money, buy what i want then worry about signing the papers.