AA Loan

Loans from the AA come in two guises, AA Personal Loans and AA Car Loans. It's hardly surprising that the AA should brand its car loan independently from its personal loan. The interest rates offered on both loans is the same, however, the AA Car Loan comes with a six-month free AA Warranty, which covers most cars up to 10 years old, and 100,000 miles.

AA - no longer an association

The AA was set up in 1905 by a group of motoring enthusiasts. It was taken over by Centrica in 1999 but in 2004, the AA left the Centrica Group in a buyout funded by two investment groups, CVC and Permira. So you can't be a member of the AA anymore because it's not an association but you can take advantage of the services it offers.

How the AA Loan works

You can borrow any loan amount from £1,000-£25,000 over a period of 12 months to seven years however the interest rate you may be offered may vary depending on your personal circumstances, the AA's credit assessment procedure and other related factors.

It may help your cashflow in the short term to take advantage of the three-month repayment holiday that is also offered by AA Personal Loans and AA Car Loans at the start of the loan. However, do remember that any repayment holiday will mean that your debt is not being reduced and is still accruing interest for the period of the repayment holiday.

If you want to make sure you can repay your AA Loan you may take advantage of AA Creditcare which is the organisation's payment protection insurance, potentially covering your repayments for up to 12 months. AA Creditcare is available provided you are aged over 18 at the beginning of your loan and under the age of 65 at the repayment date of your loan. You must also be a UK resident, in employment or self-employed and paying the appropriate class of National Insurance contributions.

You can review loan products from more than 50 loan providers including AA loan on Moneyextra's Loans Comparison tool.

Do you need to borrow more?

The AA offers existing customers a top-up loan facility which offers you the opportunity of borrowing between £5,000-£25,000, on top of your existing AA Loan. The quoted typical APR is in line with their existing personal loan rates. Other terms and conditions are also in line with the main loan products.

Is the AA Loan right for you?

The AA Loan could well be the right loan for your circumstances. Any body looking to fund the purchase of a vehicle would certainly do well to consider the advantages of the added free AA warranty. However, there are many loan products available and it is always in your interests to review what alternatives you have before making your choice.

 

Last updated April 2008

Nothing in this article constitutes investment advice or a recommendation by Moneyextra to invest in any product, or employ any service, mentioned or advertised.