Drivers warned over car credit
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.The new "55" registration plates, due to be introduced in 12 days' time, are expected to encourage a sharp upwards spike in purchases of new cars.
However, Stuart Glendinning, director of personal loans at Moneysupermarket.com, warned that while many car buyers were able to find good deals on prices, they ended up handing back their savings by paying too much for finance packages.
"Most people will look at different showrooms and magazines to research the best price to pay for their car, but they need to watch they don't pay unnecessarily for an uncompetitive loan," Glendinning said. "Accepting the finance deal offered in showrooms, rather a low-rate personal loan, can cost motorists."
For example, a driver buying a new Renault Megane for £15,980 would pay an interest rate of 13.8 per cent a year over three years with Renault's own car-finance package. Including a 10 per cent deposit, the car would cost a total of £19,592. But paying for the car with the cheapest loan currently available - Northern Rock's offer of 5.6 per cent a year - would cost £17,233, a saving of more than £2,350.
Many car showrooms offer uncompetitive rates of interest on finance packages, Moneysupermarket. com warned, which they often use to subsidise cheap prices for vehicles. Peugeot's standard interest rate, for example, is 14.39 per cent, while Vauxhall charges 11.5 per cent.
Alison Nicholson, a director of credit-ratings agency myCallcredit, warned that manufacturers were less likely to consider people's credit histories than other lenders, making it even tougher to get a good deal on credit.
"Car dealers don't tend to advertise a typical interest rate because there are other factors in play, like how many cars of a particular type they have in stock," she warned.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments