With the government’s car scrappage scheme now over, many people are moving on to car swapping when buying a new car . However, a new report by AA Financial Services has found that many car buyers who are not used to tactics used in selling cars could pay more than expected.

Some garages are offering car finance where the loan is quoted at a flat interest rate . Although it may sound like you are getting a bargain, unless the annualised percentage rate (APR) is taken into account, you will not know the extent of the interest you will owe each year. In fact, any car dealer who fails to mention the APR when offering car finance is in contravention of the Consumer Credit Act .

It is important that buyers compare the APR offered by a dealer with loan rates available elsewhere, and to avoid expensive hire purchase deals where you can lose the car if you don’t keep up payments on the scheme.

It is also vital to ask if there are any additional fees on the deal, as loan insurance, set-up or documentation fees could bump up the cost of the purchase.

Mark Huggins, who is director of AA Financial Services, said that he is concerned that some buyers are being drawn into taking garage finance that costs more than they are led to believe, so it’s very important they do some homework and be sure they can afford to pay for their new car.