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It would help if you showed your math fully instead of just offering a result from ChatGPT. What is the amount of the monthly installment used in the calculation?
I went through some sample numbers yesterday to try to figure out what the OP is on about, and I couldn't make anything match up with 21%.
For my sample I picked a 3 year old Super Duty with 31,000 miles and chose the Premium Care option for (I think) 8 years & 175,000 miles.
The cash price was $7570
The finance option required 20% down ($1,514) and a $370 payment for 18 months.
$370 * 18 = $6,660 for the stream of payments total
$6,660 + $1,514 for the down payment = $8,174 all in.
$8,174 - $7,570 = $604 total for the admin fees
$604 / $7570 = 0.0797, which is basically 8%
Without arguing the differences between simple and compound interest, or trying to figure out what math the AI might have been using, the simplest answer is going to be that a customer paying over time is going to pay an 8% premium over one paying cash.
I used $101.96 which is the amount for 18 equal payments to pay off $1817.20. I determined that as follows:
$2065 (plan price) + 206.50 (admin fee) - $454.13 (20% down) = $1817.20.
With no admin fee, the amount due would be $1652, after 20% down, as shown in your post.
I used an online calculator to determine what interest rate would be required on a $1652 loan and 18 payments of $100.96 to generate $206.50 in interest (the amount of the admin fee). The result is 14.923% (see below)
In any event, determining an equivalent interest rate for what is defined as a fee maybe a "fun" exercise but, in reality, it is still a fee. Granger is not willing to cover the cost of floating a $1652 loan or the costs of collecting monthly payments. Members have been happy with Granger's business practices. I'm surprised that you did not become aware of the fee until going through the process of making the purchase.
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