Lenders busk the car-purchase queues

AS CAR showrooms throughout Britain are besieged by hundreds of thousands of prospective buyers of new and second-hand vehicles, competition to lend them the money they need is also hotting up.

Various lenders - including motor manufacturers themselves - are offering special deals.

The offers apply to new and used cars, the market for which reaches its high-point in September and October.

One of the cheapest deals is from Yorkshire Bank. Borrowers pay 11.6 per cent APR on loans between pounds 3,000 and pounds 10,000, and 10.7 per cent for loans over that amount. Repayment terms range from six months to four years. Security for the loan is required.

Halifax charges 15.9 per cent APR on unsecured loans between pounds 1,000 and pounds 7,500, and also offers free membership of the Halifax Drivers Club, provided through the National Breakdown Recovery Club.

Bank of Scotland offers loans ranging from 14.9 per cent APR, for sums up to pounds 3,000, to 13.9 per cent on amounts above pounds 8,000. A 2 per cent arrangement fee is also charged. The offer is open until the end of the month.

Alliance & Leicester charges 15.9 per cent APR on loans up to pounds 5,000. The rate drops to 14.8 per cent for sums above that amount. There is no arrangement fee.

The AA and RAC are also offering loans. The AA charges 16.9 per cent, with a minimum arrangement fee of pounds 60 or 1 per cent. The RAC charges a heftier 18.9 per cent APR, but has no arrangement fee.

While Nationwide Building Society and HFC Bank are prepared to make loans on car purchases, their rates of between 18.4 per cent and 28.2 per cent APR are not attractive. However, HFC Bank does offer free RAC rescue membership, plus discounts on car insurance and car alarms, plus pounds 30 towards a car examination.

National & Provincial offers ordinary unsecured loans at 16.5 per cent APR up to pounds 5,000, and 15.5 per cent thereafter.

Ford is extending its Options personal contract purchase programme to second- hand Ford cars up to 26 months old and with less than 26,000 miles on the clock.

Monthly repayments are lower because only the cost of depreciation over the car's contract period are paid for. Interest is 16.6 per cent APR.

For new-car buyers, many manufacturers offer similar leasing schemes at interest rates ranging from 10 to 16 per cent. Swan National offers a leasing scheme for nearly all car models.