UK car buyers are being warned to carefully consider car finance packages being offered by dealers under so-called swappage schemes .

With the government’s car scrappage scheme coming to an end last month, some manufacturers are taking the initiative to continue the scheme by offering attractive cash incentives to customers who trade in their old motor for a brand new model.

But according to AA Financial Services, some buyers not used to car sales tactics are being lured into garage finance deals that cost more than they are led to believe.

Mark Huggins, director of AA Financial Services, explains: People trading in a 10-year-old car might well be stepping into a new car showroom for the first time and can easily get swept into unwise finance deals or other options they don’t need.

Most garages will offer finance but a common tactic is to quote for a loan at a ‘flat’ interest rate that sounds attractive. But it is important to know the APR, which tells you the total amount of interest you’ll pay each year including any set-up fees.

This recently happened to a customer. She was quoted a 6 per cent ‘flat’ rate which in fact was 13.5 per cent APR – more than twice the figure quoted.

It really is important to compare the APR offered by a dealer with loan rates you could get elsewhere.

Some garages may also offer a 0 per cent finance deal. But check if additional fees apply, such as loan insurance, set-up or documentation fees and what happens when the deal ends. You may also need to pay a hefty deposit of up to 40 per cent.

Mr Huggins also advises buyers to try and stay clear of hire purchase deals as they can be very expensive.