Car buyers told to examine finance deals carefully

Would-be car buyers should examine carefully the type of finance deal they are offered and consider whether they really need to take out payment protection insurance to cover repayments, the Irish Financial Services Regulatory Authority said yesterday.

Consumers should avoid signing voluntary surrender forms under hire purchase deals, the regulator said, as this will affect their ability to end the agreement early.

The financial regulator's warnings came as it published a survey showing that consumers can save between €500 and €1,000 by shopping around for car finance deals.

The survey shows quotes from 10 finance providers for two sample consumers.

In the first profile, of a driver who is looking for finance of €13,000 to purchase a second-hand Ford Focus, the cost of finance varied from €1,582 at Friends First to €2,079 at Fexco, based on a repayment term of three years.

In the second profile, of a motorist looking for €22,000 finance to upgrade to a Jeep worth €35,000, the cost of credit ranged from €4,290 at Friends First to €5,303 at Lombard, based on a term of five years.

The regulator's head of consumer information, Sharon Donnery, said people should make sure they know what type of deal they are getting when they take out car finance from a car dealer.

Under hire purchase agreements, drivers do not own the car until the last payment is made.

The survey also shows that payment protection insurance on car finance adds up to €69 to the monthly repayment on a €13,000 agreement and up to €76 a month on the €22,000 deal. Full details are available at www.itsyourmoney.ie or by calling the consumer helpline on 1890 777 777.