Deals to oil the wheels

It pays to shop around for car finance, says Clifford German

MOST car manufacturers worth their salt are promoting new car sales with zero per cent finance or deferred payments, and motor dealers will also be doing their bit to boost sales of new N- registration cars, with discounts and attractive trade-ins. But nearly every new car sold generates a second-hand sale, and in the current climate the second-hand car market also needs attractive finance packages to oil the wheels.

Moneyfacts, the Norfolk-based financial information service, has picked out special finance deals on offer for car buyers

The cheapest no-frills loans come from First Direct, which will offer an existing customer an unsecured loan of pounds 6,000 repayable in 36 monthly instalments of just under pounds 200, at an annual rate of just 12.9 per cent.

That does not include insurance against redundancy or sickness, which would raise the monthly payments to pounds 226.24, and the total payments to pounds 8,144.64 over three years.

Including insurance, the cheapest offer is from Alliance & Leicester, which charges pounds 224.46 a month, and pounds 8,080 over the period. Special offers from the AA, TSB and HFC Bank are significantly more expensive, but come with a range of goodies including cheaper breakdown cover, motor insurance and special rates if you want the car professionally inspected.

But as Moneyfacts points out, you might well be able to get as cheap a rate of interest by taking out a general-purpose unsecured loan from any one of a number of banks and building societies. It will always pay to shop around.

How much a car or general loan will cost

Lender Loan (pounds ) Monthly Payment APR%

(pounds 6,000 over 36 months)

with insurance without

Car loans

AA 1,000-10,000 257.29 209.00 15.2-15.3

Alliance & Leicester 2,500-7,500 224.46 201.13 13.4

Bank of Scotland 500-15,000 233.77 206.49 15.9-16.1

First Direct 1,000-15,000 226.24 199.92 12.9

Halifax branch 500-10,000 232.56 212.78 15.9-17.9

HFC Bank 500-10,000 250.40 219.41 20.5

Nationwide branch 1,000-10,000 229.47 210.12 16.9

TSB branch 500-12,000 239.70 207.57 15.9

General purpose loans

Clydesdale 500 upwards 221.90 201.56 14.0

N&P 1,000-10,000 233.63 204.13 14.5

Abbey National negotiable 228.44 204.98 14.9

Midland Bank 500-10,000 231.63 204.99 14.9

Barclays Bank 500-10,000 237.10 207.70 15.9

Notes: AA charges 1 per cent fee, offers insurance and inspection discounts and upgrade to Relay Service. Rates apply to members only. Bank of Scotland, First Direct and Halifax offer applies to existing customers.

Clydesdale charges pounds 30 fee, Alliance & Leicester, N&P and Abbey National require repayment by direct debit, Barclays offers up to pounds 100 of Boots vouchers.

Source: Moneyfacts (01692-500765).