Forecourt factor outlined to new car buyers
(28 February 2007)

Drivers looking for a new car this March should ensure they are not led into the "forecourt" finance trap without shopping around for a competitive deal, one website is warning.

According to Moneyfacts.co.uk, motorists can find good deals on personal loans for expensive products such as cars; however, consumers should be aware of advertised rates not reflecting the actual price.

"Around 85 per cent of loans use typical pricing, so bear in mind that the rate advertised may not be the actual rate you pay - this will be determined by your credit rating," said Michelle Slade, an analyst at the website.

In addition, car buyers planning to take out a personal loan to cover the cost should ensure they know that optional payment protection can cause costs to vary among lenders.

Ms Slade added that personal lending was a long-term commitment which can be inflexible, with many lenders charging early redemption fees and not allowing repayment holidays.

Earlier this month, the website questioned whether personal loans with a rate of below six per cent were dying out, advising consumers to look around for the most competitive deals they could find.