Driving a hard bargain

MOTORISTS looking to buy a new or used car once the 17 registration plates go on sale next week must consider finance carefully.

The new car registration date on March 1 usually triggers a rush of motorists chasing the latest number plates, with a knock-on effect in the second-hand market.

However, personal finance expert at MoneyComms.co.uk Andrew Hagger said whether you are buying new or used, this is not the only number you should be looking at: “If you need finance you have to crunch the numbers with care or the costs could spin out of control.”

Banks are offering record low APRs for larger loans of £7,500 or more, with TSB and Sainsbury’s Bank charging just 2.9 per cent for applicants with a squeaky-clean credit rating.

However, rates suddenly accelerate if you need to borrow only £4,500 or less, with high-street banks charging between 18.9 per cent and 26.3 per cent.

Somebody borrowing £4,500 over five years at 26.3 per cent would repay £7,701 in total, costing an incredible £3,201 in interest.

Others are cheaper, with Hitachi Personal Finance charging 6.9 per cent to borrow £4,500, giving a total bill of just £5,307, around £2,394 cheaper than the priciest bank. Sainsbury’s at 7.5 per cent and AA Loans at 9.9 per cent also offer competitive APRs on smaller sums.

Hagger said another option is to use an interest-free credit card, if your dealer allows it, with Halifax and Sainsbury’s charging zero per cent for 30 and 29 months respectively. “Make sure you can clear your debt before the introductory rate ends,” he added.