Whether 8.5% flat rate is any good depends mainly on the amount of the loan.

Smaller loans usually have a higher APR because the admin and other up-front costs make up a higher proportion of the total repayment.

The first online lender I looked at (AA) is offering 6.8%APR for the same thing; and smaller amounts up to £3,000 are 15.9% APR.

So a flat rate of 8.5% sounds expensive; as conmankiller says, that would
mean an APR of 17-18%, which I don't think is very competitive.

If the offer's from a dealer who can't or won't budge on the finance, try to haggle for a reduction  on the windscreen price to compensate.

Also the risk of a borrower failing to keep up repayments can be a
factor (increases the APR), so you might want to consider what sort of
borrower the lender is aiming at, and whether the lender would consider
them a good risk or a bad risk.

If you shop around for a loan, you'll find lower rates, largely because the kind of people who shop around:

    1. are careful with their money, and will probably be good payers to the end of the term (less risk)
    2. are also looking at deals from a dozen other lenders, so the deals have to be competitive

At the other end of the scale is the "sub-prime" lending market, lending at very high rates to people who (they hope) won't look too closely at the small print or care how much the loan costs as long as they can have the money.

Loans from dealers occupy a middle-ground - simpler than arranging a loan by yourself, but not always the best deal, but if you've done some homework beforehand, you needn't get ripped off.

Thank you --- bf

Lenders are allowed to quote rates other than the Annual Percentage Rate, and sales people often like to quote a "flat rate" because it can make the loan sound cheaper than if they quoted the APR. This is not the case, however, because a "flat rate" uses a different calculation to work out your interest than an Annual Percentage rate.

To compare loans you should use the APR rate. However, if you are quoted a fixed rate then its APR will usually be about double the rate quoted. That is, if you are quoted a Fixed Rate of 5% then the APR will actually be in the region of 10%.

So roughly your 8.5% flat rate quoted, will equate to a 17% APR.

A rate quoted as an APR is usually much cheaper than a rate quoted as Fixed. For an illustration of this see article below.

http://www.teamtechnology.

co.uk/loans-guidebook/apr

-example.html