The UK Trading Standards Institute has warned first-time car buyers to be more cautious when signing car credit agreements, advising them that they should not let their eagerness override the small print in the deal.
Many young motorists do not realize the extent of the interest when taking out a car loan and can find themselves building an enormous amount of debt. Often, the interest rates for credit on offer are not very competitive nor are the costs of additional services, the Trading Standards Institute (TSI) said.
A TSI spokesman claimed that some dealers, in particular independent car supermarkets, were exploiting the eagerness of young motorists and persuading them to take out a high-interest loan.
We are particularly concerned when we hear about consumers who are taking out one loan to cover the cost of the deposit and a second one to cover the remaining balance, said Peter Stratton, TSI’s lead officer on the motor industry.
Specific cases cited by the TSI include a 19-year-old who purchased a GBP7,000 car with various insurances on credit, building up a debt of over GBP20,000. In another instance, a 21-year-old had purchased a GBP7,500 car, and accumulated a debt totaling more than GBP15,000.
These credit agreements are regularly offered to first-time buyers and those with a bad credit history. With no legal cooling-off period, consumers will often realize the extent of their debt when it is too late, the TSI warns.