Motorists to take care with car credit

Young motorists are running into problem debt after being persuaded by dealers to take on high interest loans when buying a second hand car, it has been claimed.

The Trading Standards Institute (TSI) said that first-time buyers were often being offered one high-interest loan to cover the deposit on the car by dealers and another loan to pay for the balance.

Some were being persuaded to take out separate credit agreements for extras such as warranties and breakdown insurance, which were often at highly uncompetitive prices, the organisation said.

As there is no legal cooling off period once a deal has been done, motorists cannot back out if they change their mind later.

TSI's lead officer on the motor industry, Peter Stratton, said that dealers wanted to secure the best profit they could on each car and that selling extras on credit was a lucrative sideline.

Motorists should never sign without knowing what their total payout will be, how much they will owe each month and whether they could get a better deal elsewhere, he added.