Car buyers warned over loan deals

People looking to buy a new car have been urged to avoid showroom finance deals, as important interest rate details are often not clearly explained by dealers.

Research by Which? Car magazine revealed that essential information about car finance agreements were not adequately flagged up to car buyers in showrooms.

Dealers were found to "take customers for a ride" by not telling them in clear terms how much interest they would need to pay on their motor.

An undercover operation involving visits to 15 showrooms highlighted that not even one of them clearly demonstrated the total cost of the interest on a finance deal.

Two-thirds did not mention the APR (annual percentage rate) and a third even failed to add it to their written quote.

Emphasising the importance of the APR information, Which? Car said that without it buyers would not be able to work out how much interest they would fork out on a finance deal.

Also, not including the information in a written quote meant they were breaching the Consumer Credit Act.

Which? chief executive Peter Vicary-Smith said: "When you take out a mortgage, the bank or building society has to clearly state APR rates up front, and explain terms and conditions fully.

"We think car finance deals should be conducted in the same way. We urge car buyers to avoid showroom finance deals if they think dealers haven't given them all the necessary information."

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