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Auto Express Car Reviews
Loan default rise
Shock surge in car loan defaults
The number of motorists defaulting on car loans is set to double.
By Julie Sinclair
16th March 2008
Debt advisers at the UK Insolvency Helpline say they’ve had more than 10,000 calls in the past four months alone, from owners struggling to pay back money borrowed to buy their vehicle. That compares to 14,285 in the first nine months of 2007.
A spokesman for the group blamed the recent rise in interest rates, adding: “Many motorists have had to downgrade their model.” But we called five major high street and online lenders and found that typical APRs vary dramatically. And nearly all those we looked at have risen by one per cent in the past 12 months. Over five years, that could add almost £700 to the price of a Ford Focus 2.0 TDCi Titanium. In the worst case – with the rate increasing to 17.9 per cent – buyers could pay £26,902 for a car that cost £17,695.
The AA had the lowest hike – and claims this is because it doesn’t lend to high-risk borrowers. “We always issue loans responsibly,” a spokesman said. For advice, click on the insolvencyhelpline.co.uk website.
A spokesman for the group blamed the recent rise in interest rates, adding: “Many motorists have had to downgrade their model.” But we called five major high street and online lenders and found that typical APRs vary dramatically. And nearly all those we looked at have risen by one per cent in the past 12 months. Over five years, that could add almost £700 to the price of a Ford Focus 2.0 TDCi Titanium. In the worst case – with the rate increasing to 17.9 per cent – buyers could pay £26,902 for a car that cost £17,695.
The AA had the lowest hike – and claims this is because it doesn’t lend to high-risk borrowers. “We always issue loans responsibly,” a spokesman said. For advice, click on the insolvencyhelpline.co.uk website.
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