Plenty of offers to help you pay for a new P-reg motor

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The Independent Online
The Chancellor of the Exchequer will presumably be pleased to hear that the motor trade is expecting a boom in new car sales when the new "P" registrations start next month, but Eddie George, Governor of the Bank of England, will not.

Autoglass, the windscreen repair and replacement company, says 36 per cent of drivers polled by its Confidence Index expect to change cars this year, compared with 27 per cent last year and 33 per cent in 1994. In London the proportion rises to 45 per cent.

With 25 per cent of all new cars being bought in the month of August alone, sending a stream of older cars into the second-hand market, the result could be a pounds 5bn splurge.

Moneyfacts, the Norfolk-based database, reports today that, anticipating a boom, several lenders, including the AA (0800-605030), First Direct (0800-242424), the Halifax, Nationwide, Alliance & Leicester, Bank of Scotland, HFC Bank and TSB (local branches), have cut their interest rates on unsecured loans to buy new or used cars, and in some cases thrown in free services to woo the buyers.

First Direct, for example, charges an annual percentage rate of 15.9 per cent on car loans up to pounds 2,450 over three years, reducing to 10.9 per cent on loans over pounds 10,000. Meanwhile the AA charges 16.7 per cent APR on amounts under pounds 2,000, falling to 12.7 per cent over pounds 10,000, but throws in a pounds 20 refund on an AA inspection of the car, pounds 20 off AA car insurance, a two-month repayment holiday and the addition of AA Relay service for AA members.

But Moneyfacts points out that, while these special rates are attractive, many general unsecured loans also offer competitive rates, ranging from 12.8 per cent at Direct Line and 12.9 per cent at Hamilton Direct.

But most rates work out much more expensive if borrowers also take out insurance to take over the payments if they lose their jobs for one reason or another. It costs pounds 206.82 a month to borrow pounds 6,000 over three years from the AA but the payments leap to pounds 241.71 if the borrower wants to cover the payments with credit insurance.

Hire purchase rates are also being trimmed to catch the boom, and dealers will be making their own offers.

Company cars are expected to make up the bulk of sales in the first month of the new registration year, in spite of the increasingly onerous tax burdens that successive Chancellors have imposed on the traditional perk.

With this in mind, Lease Plan, which has offices in Windsor, Manchester and Edinburgh, is bringing in a new personal leasing product called Freedom Drive, which it claims offers all the peace of mind of a company car without the penalties of benefit-in-kind taxation.

Customers are required to put down an initial payment of 15 per cent followed by 36 monthly payments by direct debit. They can use their own money or cash provided by employers in lieu of a company car. A Rover 600 620SI costing pounds 13,581 retail would cost pounds 369.14 a month inclusive of all maintenance, repairs, vehicle licence, breakdown recovery and insurance and a mileage limit of 10,000 a year. A loan to buy the car outright would cost pounds 580.05 a month.

Lease Plan's commercial director, Steve Dunn, claims that many customers are confused by car leasing deals with several options, so Lease Plan allows them simply to walk away from the car when the agreement ends after three years.

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