AA Financial Services has reduced the rate for personal loans to members to 6.4% APR representative at a time of growing optimism in the new car market.
Representative example; £7,500 over 36 months at a fixed interest rate of 6.32% per annum would result in a representative APR of 6.4% APR, monthly repayments of £228.91 and a total amount payable of £8240.82.
The new rate* comes as the Society of Motor Manufacturers and Traders reported a jump of 7.9% in new car sales at the end of May, compared with May 2011, and the fifth consecutive month of growing forecourt sales.
The Government u-turn on fuel duty is good news
Mark Huggins, director of AA Financial Services
Mark Huggins, director of AA Financial Services, says: "Our own research** shows that more people are expected to change their car over coming months than at any time over the past three years. However, on the whole they expect to spend less.
"Families appear to be more confident about the future which is reflected in increasing numbers of cars being bought, but they are tempering that confidence by settling for smaller or more economical cars.
"Although the cost of fuel remains high, even with recent small price falls, the average price of a litre of unleaded petrol is 131.9p*** per litre. But the Government u-turn on fuel duty is good news and this will certainly help give a boost to the new and used car markets."
Mr Huggins pointed out that 13% of car buyers use a personal loan to fund part or all of the cost of a car, slightly up on the year before but considerably less than the 20% who planned to borrow to finance a car in 2009.
"By dropping the borrowing rate for AA members we may be helping many to realise an ambition to change their car, perhaps for a new one, sooner rather than later," he said.
"The 6.4% representative APR is very competitive. It's available for loans of between £7,500 and £14,950 over periods of up to seven years."
He said that he expected the AA's next Car Purchase Index to show the motor market gaining momentum, particularly with growing interest in hybrid and other fuel-frugal models.
Time for a shiny new car?
*Rates correct at time of publication and are subject to change
** According to the AA/Populus Car Purchase Index study of over 16,500 AA members (January 2012) 18% of respondents plan to buy a car this year (up 2%); 13% would use a personal loan (up 2%)
*** Source: AA. Average price of a litre of unleaded petrol 131.9p (as of 26 June 2012). In 2009 the price was 95.0p per litre. On 26th June 2012 the Government announced that it was scrapping a planned 3p-per litre duty increase in August
AA loans are provided by The Co-operative Bank p.l.c., P.O. Box 101, 1 Balloon Street, Manchester M60 4EP. Registered in England and Wales No. 990937. The Co-operative Bank is authorised and regulated by the Financial Services Authority (No. 121885), subscribes to the Lending Code and the Financial Ombudsman Service and is licensed by the Office of Fair Trading (No. 006110).
Applicants must be UK residents, aged between 23 and 69, have a minimum annual income of £10,000 and either be a homeowner or hold a debit/credit card.