Car buyers 'taken for a ride' over credit

A number of motorists are running up huge debts after being persuaded to take on high interest credit when buying a car, the Department of Enterprise, Trade and Investment’s Trading Standards Service (TSS) has today revealed.

The Department is highlighting the problem during National Consumer Week, (NCW), 20-24 November.

NCW 2006 is themed “Hey Big Spender!” and focuses on the problems, pitfalls and best practice for consumers when they make major purchases, including homes, cars, holidays, furniture and audio-visual equipment.

Buyers, especially those with a poor credit history, are regularly being offered high-interest loans to cover the cost of their new car, while others are persuaded to take out separate credit agreements for extras such as warranties or breakdown and gap insurance, often at highly uncompetitive prices.

There is no legal cooling off period once a deal is struck leaving motorists without the option to back out when they later realise what they have done.

Damien Doherty, TSS’s Lead Officer on credit said: “We want to ensure people don’t get ‘taken for a ride’ when they go out to buy a car and that instead they slow down and think.

“All dealers want to secure the best profit they can on each car. Selling extras on credit, including insurances, warranties, breakdown and roadside assistance, is a lucrative sideline.

“Motorists should never sign anything without knowing exactly what their total payout will be, how much they will owe each month and whether they can get a better deal elsewhere.”

He continued: “We are particularly concerned when we hear about consumers who are taking out one loan to cover the cost of the car and a second one to cover the extra insurances.

“It is vital that all buyers, particularly young motorists, think long and hard before signing any type of credit agreement. Don’t expect the dealer to look after your interests – it’s up to you to look after yourself.”

All would-be car buyers should follow a basic check-list:

• Once you spot a potential purchase, check out its recommended value in a trusted industry price guide. This will help you avoid being overcharged.
  
  The car will only be value for money if the mileage can be guaranteed – in other words, if it has not been “clocked”. There are a number of companies who will carry out mileage checks



• Ensure the car has been properly maintained and check the service history



• If you are being sold any ‘extras,’ e.g. breakdown cover or an extended warranty, check whether you are getting value for money and that you cannot get the same cover much cheaper elsewhere



• If you are thinking of using credit, check what the cost of the loan would be with other lenders



• NEVER be hurried into signing a credit agreement

Consumerline, the telephone consumer advice service run by TSS received a total of 646 complaints about second hand cars bought from dealers in the nine months to the end of September.

Around 62% of the cases were about defective vehicles, with another 18% about misleading claims or verbal misrepresentation.

For advice on any consumer issues contact Consumerline on 0845 6006262 or visit www.consumerline.org

(EF/KMcA)