Banks offer cut-price car loan deal to Rover workers

MG Rover workers who faced having to use their redundancy money to pay off loans on cars bought from the collapsed company were yesterday offered a deal which will save them thousands of pounds.

MG Rover workers who faced having to use their redundancy money to pay off loans on cars bought from the collapsed company were yesterday offered a deal which will save them thousands of pounds.

But the banks that financed the loans, HBOS and Lloyds TSB, are likely to end up out of pocket.

On a visit to the West Midlands yesterday, the Chancellor Gordon Brown announced that Rover's administrators, PricewaterhouseCoopers, had reached an agreement with the banks to ease the plight of hundreds of affected Rover employees. They can hand the car back with the loan written off, buy the car at a heavily discounted price or agree a new loan based on the current value of the car.

Many employees bought the cars for family use. But some took advantage of the cut-price deals on offer originally to buy two or three vehicles as a way of making some quick money.

Separately, HBOS, through its subsidiary Capital Bank, held a meeting with the MG Rover dealer council yesterday to thrash out an agreement to reduce their financial exposure. Dealers have complained that thousands of unordered cars were forced on them by the manufacturer at full price as it slid closer to collapse. The dealers have been left having to pay interest charges to Capital Bank on the unsold cars.

HBOS and the dealer council said progress had been made although a settlement has not yet been reached.