There are two schemes offering "total motoring" deals at the moment: Freeway, from the Bank of Scotland, and Motorbase, launched last week by the Woolwich.
Motorbase combines all your motoring costs into a single monthly payment, which can include one or more items from a "menu": selecting the car, finance repayments, insurance, maintenance and rescue cover.
If you want to check what Motorbase offers, call up or visit the website for a quote. A car leasing company (PPH) has teamed up with Woolwich and uses its buying power to negotiate prices up to 25 per cent lower than the manufacturer's list price.
If you have the cash you can buy the car outright, or finance it via the Woolwich. It offers a choice of packages: a simple repayment loan where you pay pay a large deposit and monthly payments; or a personal contract plan (PCP) , where you pay a reduced monthly payment and a large part of the cost of the car is deferred until the end of the contract period, usually three years. Drivers can then buy the car outright with a lump sum, trade it for another contract on a new car, or walk away. The Woolwich expects the PCP option to be popular - and it pushes it hard on the website.
Interest on repayments is charged at 9.9 per cent, which compares favourably with an unsecured personal loan. The package also offers a maintenance deal, which covers servicing, repairs and wear and tear such as new tyres. Maintenance costs start at around pounds 30 a month for a small car such as a Vauxhall Corsa.
Bank of Scotland's scheme, Freeway, has been running for four years. As with Motorbase, Freeway customers buy their cars over the phone, and pay for them using PCPs. The monthly charge can include servicing and maintenance. The disadvantage is that Freeway does not discount cars, but sells them for the "full on the road price".
The reduced monthly outgoings of PCPs mean that customers can drive more expensive cars than they'd get with a normal loan. The deferred part of the cost - the guaranteed future value - is based on an estimate of the market price for the car after the contract ends. Buyers of up-market cars with below-average depreciation, such as a Mercedes, Volvo or BMW, will have proportionally lower monthly payments. If they want to keep the car, however, they will have to find more cash at the end of the contract period.
All PCP deals have mileage restrictions, so they may not suit all drivers. The idea of walking away at the end of the contract sounds flexible, but it does mean you'll have nothing to trade in against another car.
Services such as Motorbase and Freeway score over forecourt deals because buyers are not tied to one make of car, and there is no haggling over the finer points of the car's price or the cost of any finance.
But there are some drawbacks. Motorbase admits it will not be able to negotiate discounts with all manufacturers. The more exclusive manufacturers are less likely to cut costs. Motorbase cannot guarantee test drives - this depends on the goodwill of local dealers - and there is no chance to part-exchange or trade in your existing car. Woolwich expects the scheme to appeal to former company car drivers, who have nothing to trade in.
The advice from motoring organisations is to check the full cost of buying a car, including trade-ins or part exchange, interest rates, insurance charges and any discounts. "Research all your avenues carefully, read the small print, and make sure you can afford it," says Jonathan Simpson, from the RAC. "Motoring costs are soaring at the moment."
n Contacts: Freeway, 0345 697311 or www.freeway- cars.co.uk; Motorbase, 0870 607 2727 or www.motor-base.co.uk
PCP contracts over 36 months charged at 9.9 per cent interest
Vauxhall Corsa 12V
Cash price pounds 6,833
Deposit pounds 1,200
Monthly payment pounds 99.65
G'teed future pounds 3,366.42 value/final payment
Renault Megane Scenic RT Alize
Cash price pounds 14,126.83
Deposit: pounds 5,000
Monthly payment pounds 138.53
G'teed future pounds 6,372.34 value/final payment
Source: MotorbaseReuse content