M&S can put you back on the road

MARKS & Spencer is the best overall buy for people who want a loan to buy a new L registration car next month.

The retailer cut its rates on personal loans recently and narrowed the differential between the rates for customers with M&S credit cards and non-customers. People who take out an M&S credit card will qualify immediately for the customers' rate although M&S warns that car applicants must pass a rigorous credit scoring test.

M&S's loans were launched on a trial basis and could be changed at the end of August.

Personal loan rates do not vary over the term. They are designed to run the full length of the agreed period and there may be a penalty for early repayment.

TSB is offering a lower interest rate than M&S - 15.9 per cent on loans over pounds 5,000 - but you must open a TSB account.

TSB's deal, which includes a rate of 17.9 per cent (APR) on loans of pounds 2,000 to pounds 5,000, lasts until the end of August.

Midland's 17.3 per cent rate applies on loans from pounds 3,000 to pounds 10,000 but on loans up to pounds 3,000 the rate is 19.4 per cent.

Yorkshire Bank's rates are attractive but applicants must apply to a Yorkshire branch and these are thin on the ground in the south of England.

Yorkshire Bank is promoting its New Car Finance Plan, whose APR of just 10.7 per cent on pounds 10,000-plus looks like a bargain. But this is a hire purchase agreement. The bank will only lend up to 90 per cent of the purchase price and will own the car until the loan is completely paid off.

Abbey National is giving away car alarms or steering wheel locks with car loans of between pounds 1,000 and pounds 10,000 before the end of August. Abbey's interest rates are nothing to shout about though, at 19.9 per cent for pounds 2,000 to pounds 10,000 and 21.9 per cent on sums up to pounds 2,000.