The Deadly iTendering Process

In spite of, or maybe because of, my wage slave status I’ve been giving a lot of consideration to buying a Macbook on hire purchase. It would be pure indulgence of course as I don’t need it. It doesn’t really do anything that a windows laptop couldn’t and it’s expensive for the specifications, but damn it, it’s pretty as hell.

The only reason I’m giving any serious credence to the idea is because I’ve discovered that employees of The Work get a variable discount at the online apple store. According to the discount page I can get the smallest of new aluminium body Macbooks for £872.85 instead of the normal £929.00 retail price. That’s about 8% of a saving over the retail. At the other end of the spectrum I could choose to get the highest rated of the Macbook Pro’s for £1754.90 instead of the retail price of £1908.00 which again is an 8% saving on the price. It’s not much of a discount to be fair, but any discount at all is better than a kick in the balls from Gavin Hastings.

Now the Apple Store has a wee info box that claims I could own the Aluminium MacBook I mentioned for as little as £23.84 a month over 36 months. That means in the long run it would cost about £858.24 for a machine that I could get for £872.85 with the corporate discount rate. This seems a fairly questionable to me though.

Why would Apple make a loss on the hire purchase option when everyone else in the world is milking it for all it’s worth?  As a cynical Ayrshireman I went looking for the small print and found the fatal line hidden halfway down the page: “Typical APR of 15.7%”. In my previous experience only Bill Gates himself would be given the typical APR on a loan, but I’ll use it in my calculations as I’ve no idea what rate they would offer me.

First of all I’d like to say that APR is a slippery customer. It’s not as simple as adding 3×15.7% onto the amount of the loan and having a cup of tea. Thankfully the good people at Microsoft included a formula in Excel that calculates the final payable amount for you.

If you’re interested the formula in question is called PMT() and you use it with the following arguments:

=PMT(Monthly_Interest_Rate, Number_Of_Monthly_Repayments, Loan_Amount, End_Value, Payments_Due)

I’ve paraphrased the argument names a bit to make them clearer. To make use of the formula you need to divide the APR by 12 to get the monthly rate and plug this into Monthly_Interest_Rate. The rest are fairly straightforward: Number_Of_Monthly_Repayments is the number of months that the loan will run for. Loan_Amount is the original amount you’re borrowing; End_Value should normally be zero as it’s the goal you’re shooting for. Payments due is optional and sets if the payments are due at the beginning or end of the loan period. This formula will give you the approximate monthly repayments that you’ll really be paying. These figures might vary a bit from what the lender decides due to other factors, but it serves as a good guide as to what the repayments and total are going to be.

What about the results though? Well according to my excel based calculations my actual monthly repayments, assuming an APR of 15.7% and a loan amount of only £872.85, would be £30.56 which is £6.72 a month more than the Apple Store info box claims. A quick multiplication by 36 for the number of months of the loan gives a final total cost of £1,100.08 for my brand spanking new Macbook. That’s a difference of £227.23 or roughly 20.5% extra on top of the original cost.

I still want it though. These figures change nothing. This is just the infamous TENDERING PROCESS in action.

EDIT – If you’re curious the top of the line Macbook Pro at £1754.90 would have repayments of £61.44 with a total £2,211.75 payable by the end of the 36 months.