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F - Flat rate

05 June 2006

Flat rate - The amount of interest on a loan per year as a direct percentage of the amount borrowed. This is easier to calculate and understand than the APR.

However, don't try to compare the two, because a flat rate will make a loan appear far cheaper than it really is, since it ignores any additional fees and charges.

The best way to compare loans is to look at the APR - don't get fobbed off with just the flat rate. (See APR and Finance.)

Glossary

Want to know the difference between your APRs and your PCPs? Our Glossary will guide you through the minefield of car-buying terms.

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