Thursday 27 October 2016

Alarm bells as motorists are 'throwing away' money on car finance deals

* Signs of return to Celtic Tiger days of careless spending

Published 27/05/2015 | 02:30

Motorists are being urged to shop around before committing to a car finance deal
Motorists are being urged to shop around before committing to a car finance deal

'ALARM bells' are ringing over how motorists are throwing away money on some car-finance deals, a consumer chief warns today.

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Motorists are being urged to stop, think and shop around before committing to such packages.

The plea, from Michael Kilcoyne, deputy chairman of the Consumers Association of Ireland, follows revelations last week of wide variations in the amount of interest that drivers are being charged on their car loans.

The specially commissioned Volkswagen survey showed that 27pc of motorists had no idea what level of interest they were being charged on their finance packages.

Of those who did know, one-fifth (21pc) said they were paying between 4pc and 5pc; one-in-seven (15pc) were stumping up 6pc-7pc while one-in-eight revealed they are getting a competitive 2pc/3pc rate of interest.

The survey was carried out online by Ignite Research on a nationally representative sample of 1,000 respondents.

It has been calculated that even a 2pc difference in interest rates on a €17,000 loan would cost motorists an extra €340.

Mr Kilcoyne says that sort of sum would pay the property tax and/or water charges for many people.

Yet, he says, some people are paying little or no close heed to the whole area and are letting money slip away from them.

Responding to a query from Independent Motors on the findings of the Volkswagen study, he says: "People are throwing money away on car finance. It's starting to become like in the Celtic Tiger days. They are just not shopping around. They are not checking out interest rates."

In one way, he says, he was surprised that the 27pc level of 'don't knows' wasn't higher such has been the take-off in credit spending.

It is often the case, he pointed out, that people get caught up in the excitement of buying a new model and overlook the important area of the interest rates they are paying on the finance for it.

But they need to take a good look around at what is available. And he urged them to try as many sources of funding as possible.

"They can often get as good a deal in their local credit union," he claims.

However, he fears the Volkswagen study only confirms the view that many people are "getting back to living for today".

He told us: "It (the survey) is ringing alarm bells about what people are doing out there. In reality they are throwing money away."

He says new legislation to strengthen consumer rights is about to be introduced.

"But all the legislation in the world is no use if we, as consumers, don't shop around and get the best deal for ourselves."

His warnings are timely as increasing numbers of potential buyers are planning to drive away a new 152-reg model from July 1 - only a few weeks away now.

And with finance accounting for an increasing proportion of deals, it would appear there is a lot of money to be saved by following the old adage of shopping around and bargaining.

Virtually all car companies report a big increase in Personal Contract Plans (PCPs).

But there are several other finance options too - such as zero-to-low interest on loans.

Indo Motoring

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