UK DRIVERS are being charged as much as £1,200 in hidden fees when buying a car on finance.
Millions of Brits are unknowingly falling victim to additional upfront and end of contract charges when paying for their motor using a PCP deal.
A recent investigation by Admiral Financial Services has revealed motorists spend an average of £15,500 on car finance deals each year, with almost £1,200 going towards secret fees.
Drivers are likely to be slugged a lot more for their motor by simply forgetting to check for a better deal from a different finance provider.
According to the study, drivers could save on average £736 simply by arranging the finance for their car before heading to the garage.
In some cases, these savings could jump to £2,136 depending on certain models.
Tips for buying a car on finance
- Know what you are signing up for. Brits are often confused by industry jargon. If you’re unsure of what the different finance types are, research them before you head to the garage.
- Stick to your budget. Work out what you can afford to spend monthly, but don’t forget to factor in costs like car insurance, fuel, road tax, MOTs and servicing – that way you won’t be caught out with unexpected costs.
- Work out your expected mileage. Think about how far you usually drive in a year and be realistic. Make sure the deal you are signing up for will cover you, paying for excess mileage afterwards will be significantly more expensive.
- Ask plenty of questions. Ask about additional charges, what they’re for and how much they are upfront if you don’t understand them. The more informed you are before you take out an agreement, the less likely you are to be stung by unexpected charges.
- Shop around. It might seem time saving to sign up to an agreement straight away but shopping around could save you a considerable amount of money.
Some car dealerships which provide partnered finance will impose charges to buyers who want to pay for their vehicle using an agreement from a third party.
Motorists who choose this option are charged £365 on average, with the highest fee being £495.
Other garages will also include an administration fee, with this often covering vehicle preparation and provision of documentation.
The average charge for these minor tasks can cost £169 on average, with the highest fee coming in at £199.
Car finance deals are based on drivers sticking to the annual mileage limits laid out in their agreement, with providers clearly stating that customers will be charged if they go over it.
While these small pence per mile charges might not seem very significant, driving just an extra two miles a day over the course of a four year agreement could see you charged £286.
Even paying off your financial agreement early can see you hit with fees, but this varies depending on your provider.
Scott Cargill, chief executive of Admiral Financial Services, said: “Purchasing a car on finance is a popular option for many drivers as it allows them to drive a new or nearly new car and spread the costs over monthly payments rather than having to pay in one go.
“Where consumers could lose out substantially is if they are hit with additional charges that they simply haven’t budgeted for.
“We’d urge people to shop around before signing up to any financial agreement, as they would for any large purchase, to ensure they’re aware of any restrictions on mileage and car condition charges upfront.
“Saving a small portion of their budget to cover any additional costs at the end of their contract could also help make sure there are no nasty surprises.
“Research is key when it comes to car finance and making sure you’re not only aware of charges but also understand them before you sign on the dotted line could save you a lot of money in the long run.”