Consumers Should Be Wary Of Car Loan Deals
One of the success stories of the last government was that of the car “scrappage” scheme, which allowed people £2,000 trade in value on an old car against a brand new one. Sine the end of the scheme, many dealers have continued to offer their own version of the scheme, with the majority calling it a “swappage” scheme.
In order to sell cars, dealers are offering many what look like attractive offers to entice consumers to buy a new car. As well as the swappage schemes, many are offering in house finance with cheap car loans and in some cases zero per cent finance and loans.
But prospective purchasers of a new car have been warned to be wary of the car loan deals which are offered by the dealer and have been advised to read the small print very carefully, to ensure they know the real cost of the loan they are taking out.
A recent mystery shopper exercise by Which? revealed that a large number of car dealers talked about the flat rate on a car loan through themselves, but completely failed to mention the APR (Annual Percentage Rate), which shows the true cost of a loan over the full term.
AA personal finance have warned consumers to check the details of any finance or car loan being offered by the dealer and compare this with other loans on the market. They say it could work out significantly cheaper to take out a personal loan independently, rather than opt for the dealers own finance.
Mark Huggins of the AA said “Most garages will offer finance but a common tactic is to quote for a loan at a flat interest rate that sounds attractive. But it is important to know the APR, which tells you the total amount of interest you’ll pay each year including any setup fees.”
“Some garages also offer a 0% finance deal. But check if additional fees apply, such as loan insurance, set up or documentation fees and what happens when the deal ends. You may also need to pay a hefty deposit of up to 40 per cent.”
