Be wary of interest-free car finance

Thu, 13 Sep 2007



Purchasing a new car remains that second largest financial transaction most people will ever make, behind buying a house . Most drivers have to borrow money to finance their purchase, with many choosing car finance . Interest-free credit is often applied to vehicle finance, and although it may seem too good to be true, consumers need to be aware of this type of funding .

Interest-free car finance is usually restricted to a certain period, and require the consumer to pay a large deposit and pay off the rest of the loan very quickly. For many borrowers, unsecured personal loans allow cash payment – meaning that the consumer owns the car outright.

Getting a headline rate (ie: the 6.5 per cent currently advertised by some banks), will depend entirely on your individual credit rating . Many applicants for personal loans, whether seeking car finance or not, are disappointed to hear that they are offered a much higher rate.
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