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AA Car Loan

An AA Car Loan doesn't offer the best rates by any means, but the free car inspection could be worth more than what you sacrifice in interest. With a good payment protection policy on top, if you're not an expert car buyer then this is a great deal.

AA Car loan examples (correct at publication date, uninsured):

  Monthly Repayment APR
£3000 across 2 years £138.98 10.9%
£5000 across 5 years £98.94 7.2%
£10000 across 7 years £150.79 7.2%

The AA rates are better than average, but not the best you'll find. To obtain their best available rate of 6.7%, you'll need to spend £20,000- which makes you a very serious motorist! Most car buyers, especially in the second-hand market, are only borrowing up to £5,000, and at those levels the AA car loan rate is closer to 7.2%.

Where the whole picture changes is that included in the deal, the AA car loan offers a free Standard car inspection. If you're buying a used car, the value in getting the inspection is enormous. It's officially worth £145, which is a large chunk of the interest you'd be paying on the loan anyway. But the real value in peace of mind and servicing that you would otherwise pay if you bought a lemon is pretty much priceless. Today's modern cars are complex, and most garages charge in the region of £70 per hour as soon as the bonnet is open. By doing what they do best, the AA is offering a very special deal.

Be aware though that you only get one free inspection with the loan- so use it wisely. If the check turns up a dud car, you won't get another free check on the next car you look at. So be clever- when you look at cars, tell the owner you'll definitely be inspecting it, so they might as well be honest if it's a lemon.

The other benefit to mention on the AA Car Loan is the payment protection policy, which is excellent. The extra premium isn't too expensive, and if you claim, benefits begin after only 15 days sickness (with most policies you will have to wait a month). There are no arrangement fees; but then only high street banks still think they can get away with those.

The maximum loan term is seven years- but unless you're buying a new car you intend to keep, we recommend you don't borrow beyond five. If you know your cars and don't need the inspection, then look elsewhere; but if you'd like the expert opinion, then this is a great product.