Three ‘stealthy’ fees to watch out for when buying a car… you could be stung for £1,000s
DRIVERS have been warned of four “stealthy” fees they should watch out for when buying a car or risk being stung for thousands.
Car finance experts urged Brits to be on their guard for sneaky charges which brokers add to boost their profit margins.
Around 80% of car sales in the UK are done on finance and the majority of these use a Personal Contract Purchase (PCP) structure.
This is when you agree on a loan of the motor over a set term and a set of monthly payments, similar to other forms of finance.
Then, at the end of the term you have the option to make a final “balloon payment” to own the car, hand it back or trade it in as a deposit on your next purchase.
Steven Jenkins, finance specialist at PCP claims, revealed that loan managers can tack extra fees onto these deals, often without customers even realising what they are.
He explained: “PCP agreements have become increasingly popular due to their flexibility and lower monthly payments.
However, beneath the surface of these seemingly attractive deals lie a multitude of fees and charges that can significantly impact overall affordability.
“It’s like peeling an onion; there are layers of costs that need to be understood.”
Roll on the miles
Whenever people buy a used car, checking the mileage is one of the first things they tend to do.
Low mileage motors are like gold dust, while second-hand markets are flooded with overused but cheap bangers.
In short, more miles equals less value when it comes time to sell on.
As a result, many PCP contracts actually include mileage limits, some of which can be quite stringent.
Make sure to keep an eye out for these in your agreement as the penalties for going over can be severe.
And if you’re a long-distance driver on the regular, PCP might not be for you.
Easy does it
Similar to mileage limits, you have to remember that even though you’ve signed a contract, the car isn’t actually yours until you choose to pay it off.
Instead, it’s an asset owned by a dealership and loaned to you for the agreement period.
In order to protect their investment, the car will have to be booked in for regular servicing and inspections.
Have you been hit with unexpected fees after buying a car? Contact jacob.jaffa@news.co.uk to share your story.
These can result in mounting fees if the dealer considers the car to be suffering excessive wear and tear.
Leave it in a bad enough condition and it could even void your agreement, leaving you without wheels.
Keep them up
As with any loan, there will be a payment structure agreed in advance before the dealer hands over the keys.
Make sure this is affordable and take note of the interest rate applied.
However, you should also pay particular attention to any fees or interest rate boosts on overdue payments.
You could see your bills spiralling by thousands if you fail to keep up with your payments.
Always seek professional financial advice before taking out a loan.
If you find yourself struggling with debt, contact Citizens’ Advice for help.