Car Swappage Is The New Car Scrappage But Be Careful

Car swappage has taken over from the finished Government car scrappage scheme but car buyers are being warned to carefully consider car finance that it is offered.

Car insuranceAccording to AA Financial Services, car buyers not used to car sales tactics could end up paying more than they bargain for.

A common tactic from garages is to offer car finance whereby the loan is quoted at a ‘flat’ interest rate. This might sound attractive but it is vital to know the APR (annualised percentage rate) which tells you the amount of interest you’ll pay each year including any set-up fees.

For example, a customer was quoted 6% ‘flat’ rate which was actually 13.5% APR. If a car dealer fails to mention the APR when when offering you car finance this contravenes the Consumer Credit Act.

Even if a garage offers you a 0% finance deal, make sure you understand if dditional fees apply, such as loan insurance, set-up or documentation fees and what happens when the deal ends. To qualify for such a deal you may also need to pay a high deposit of up to 40 per cent.

Mark Huggins, director of AA Financial Services, says “I am concerned that some buyers are being drawn into taking garage finance that costs more than they are led to believe, so it’s very important they do some homework and be sure they can afford to pay for their new car.”

He says “It really is important to compare the APR offered by a dealer with loan rates you could get elsewhere” and warns buyers to try to avoid being drawn into hire purchase deals which can be very expensive, the car remaining the property of the finance firm until the last payment is made. A default can result in the company reclaiming the car.

The AA’s current unsecured loan rate is 8.9 per cent typical APR for a loan of 7,500 and above over five years. It can be arranged online at

When buying a car, make sure you take into account other costs associated with the purchase and not just the price of the car. For example there’s car insurance not to mention the running costs, with petrol costs over £6.00 per gallon in some parts of the UK that’s certainly something to consider.

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