BEWARE THE ‘ADD-ONS’.
When I took out a car finance deal I was pushed into taking out tyre, alloy and dent insurance. Why I hear you cry?! Well I could have been held liable for some damage under the car finance deal at the end of term – though the rules were vague. Total cost: £1,000. And the tyre policy was rubbish when I claimed on it!
Car finance deals are sold with the promise of having some left-over cash at the end of the agreement that will ‘pay the deposit on your next car’.
This works because the firm estimates what the value of the car will be at the end of the deal and what the ‘balloon payment’ will be (the amount you pay if you want to keep the car). There then follows an enormously complicated calculation that I won’t bore you with.
Suffice it to say, in practice, this rarely seems to occur. So
TRADE IN VALUE:
Rumours abound of cars fitted with immobilisers for people who default too!
For all their complicated terribleness, car finance contracts are regulated financial agreements (under the Consumer Credit Act) which means you can go to the financial ombudsman if you’re unhappy with the result of a complaint.
In short, be sceptical, only agree to take a car you can afford, not one that’s out of your price range, and walk away if you get the hard sell!
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