As the peak season for car-buying approaches, buyers of new and used cars are being warned to take care before signing up to car finance agreements, with even the experts admitting that deals are difficult to understand.

The new car registration plate '63' starts on September 1, and sales of used cars also mushroom in September and October as buyers take advantage of trade-ins which in turn leads to a rise in motor insurance renewals at this time of year.

Scots are particularly fond of new or nearly new cars according to research carried out recently by Aviva. Across the UK the proportion of cars under three years old is 19%.

But in Scotland it rises to 25% and in Glasgow and Edinburgh it is even higher at 30% and 26% respectively. The most popular 'new' car in both cities is the Ford Fiesta Zetec.

Most new cars are bought on credit. According to latest figures from the Finance & Leasing Association, over 70% of private new car registrations are purchased using finance arranged through dealers.

However, the deals are not always straightforward. Andrew Hagger of Moneycomms.co.uk says: "It's a real minefield. One of the biggest problems is that there are so many different options."

One is a personal contract plan whereby you pay a fixed monthly amount for two or three years and then either hand the car back or pay off the remaining balance with a lump sum. Sometimes free servicing and insurance may be included.

However, referring to one prominent car manufacturer's personal contract plan, AA spokesman Ian Crowder says: "I challenge anyone to really understand it."

With a contract plan, it is important to remember that you don't actually own the vehicle until you make the final payment and this amount may change if you exceed an agreed mileage.

More conventional finance agreements are available and some car manufacturers are currently offering attractive 0% finance deals.

However, Mr Crowder points out: "The caveat is that you usually need a deposit of around a third of the cost - so you may need to get finance elsewhere to help with that. And there is no such thing as a free lunch so it usually means you won't get a discount on the price of the car."

When credit is offered, Mr Hagger says it is important to ask about the total cost rather than just looking at the interest rate.

He explains: "The interest rate may look okay but with car finance deals there are often additional fees such as acceptance and document fees."

A car salesman may still offer you a discount if you buy through a garage's loan scheme, as he may receive commission from the lender which he can share with you, but you may be able to negotiate a better deal if you have arranged a personal loan elsewhere and can pay with cash.

There are some very low cost personal loan deals available, although the best rates are normally only available on loans of £7500 or over. They include Sainsbury's Bank which is charging 4.9% and Clydesdale and Marks & Spencer both charging 5%. For smaller amounts, however, a credit card, such as the MBNA's Rate for Life of 5.9%, is likely to be cheaper.

But to get these good credit deals, you need to have a good credit status. Equifax, the credit reference agency, is recommending that anyone who needs finance to fund a new car purchase should obtain a copy of their credit report before they apply for a loan. You can gain free access to your credit reference by logging into Equifax for a 30-day trial.

One of the advantages of buying a new car is the lower running costs.

According to calculations by Moneysupermarket.com, which looked at the top five most popular vehicles -Nissan Qashqai, Peugeot 208, BMW 3 Series, Ford Fiesta and Vauxhall Astra -petrol, road tax and MOT with a brand new car were considerably lower than a five-year-old model of the same vehicle. For a Ford Fiesta the figures were £1,134 against £1,673.

However, the comparison made no allowance for depreciation. A new car typically loses around a third of its value in the first year according to the AA.

The cost of insuring the newer car was also lower than the older equivalent models. But this advantage may be lost the following year if you let your insurance auto-renew via direct debit or through your credit card.

According to Gocompare.com, some 30% of motorists leave their insurance to auto-renew at this time of year, missing out on potential savings of up to £238 by not shopping around.

Motorists who believe they can get better value by opting for a second-hand car also need to be alert to a number of other problems.

Recent research by the AA found 30% of buyers say they have been misled about past problems with a used car they have bought.

Apart from mechanical problems, there can be an outstanding finance agreement which can pass to a new owner, who may not be aware of it. By going through AA Cars used vehicle website, or getting an HPI check on a used, these types of problems can be avoided.