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Your MONEY: Loan Gimmicks Can Drive Up Cost of a New Car ; CASHPOINT

Aug 21, 2007

By James Coney

DON'T be lured by insurance and loan gimmicks if you are buying a new car.

Tesco is offering pounds 100 off a sat nav set for signing up online with its car insurance.

Barclays has a specialist car loan package, which offers a typical rate of 7.4 per cent and then money off its car insurance and RAC breakdown.

But it is often better to buy these 'extras' individually when you've found a cheaper loan or insurance elsewhere.

If you don't have the cash, then taking out a personal loan is usually the cheapest option to buy a car. You can get a rate of between 6.3 per cent to 6.9 per cent with Moneyback Bank, GE Money and the AA.

Shop around and use a comparison site. When you apply, your credit is checked, and if you do this often, it will look like you're applying for lots of loans on your file. By using a comparison site you won't leave these traces.

Work out what you can pay and over what period of time. The longer the term, the more you pay in interest.

For car insurance and break-down cover again shop around. Work out the excess you want to pay - the higher this is, the cheaper your premium is likely to be.

Only once you've got a full range of prices, should you then consider whether taking a gimmick is worthwhile.

(c) 2007 Daily Mirror. Provided by ProQuest Information and Learning. All rights Reserved.

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