Car Loan Warning
Nov 23, 2006
Car buyers are being warned to check car loan agreements carefully before signing up to any deal. The Trading Standards Institute (TSI) has said that some dealers are persuading people to take on inappropriate and uncompetitive credit agreements.
Buyers, particularly those with poor credit ratings, are being sold several separate loans which together cover the costs of buying a car. One loan is used to pay the deposit, another for the balance of the purchase price, and another for additional costs such, as extended warranty and personal protection insurance.
It is often young people who are victims of such tactics. They are, of course, keen to own their first car but may well have a less than perfect credit history. These loan agreements often charge high rates of interest and do not have an automatic cooling off period. Many motorists have not checked the small print thoroughly and do not realise the extent of their debt until after they have signed up to the agreement. In one case currently under investigation, a buyer ended up owing £20,000 as a result of loans taken out to buy a £9,000 car.
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