January is the time of year when thoughts turn to trading in the old banger for a racy little roadster or a reliable runabout.

But for those whose Christmas spending sprees mean they can't stretch to the full price of a new car, it's not the end of the road.

Competition in the car finance market is as fierce as in most other areas of lending and all of the major banks are offering tailored car finance packages with a variety of benefits. Free membership of the Automobile Association, a discount on the first year's insurance premium or even a free mobile phone are among the perks available depending on which lending institution the motorist chooses.

Figures released by the Society of the Irish Motor Industry earlier this week showed car sales grew by nearly 19 per cent last year, boosted by the extension of the Government scrappage scheme. But even though this ended on December 31st, most lenders expect another bumper year for car sales.

"I'm optimistic it will be another good year," says Mr Paul Gurhy, product manager of Bank of Ireland's Motorloan package.

"I don't know if this year will be as fantastic for new cars as last year but finance has never been cheaper, there are good deals out there and the economy is good with confidence high," he says.

The banks, keen to get a slice of the action in this buoyant market, are offering competitive rates, flexible repayment options, easy application and speedy decisions.

Comparisons of the various rates on offer show that a motorist, borrowing £4,000 at a fixed rate over a four-year term, would pay between £98.80 and £105.10 each month without loan protection.

Most of the banks encourage borrowers to avail of the protection which provides cover against accident, illness and redundancy but this pushes up the cost of the loan to between £101.76 and £116.15.

Aside from the difference in the cost of the loans on offer, the variety of added extras make it worth while to shop around before finally deciding where to bank.

"Peace of mind motoring" is among the benefits offered by AIB's Accelerator car finance package which includes free membership of the AA for one year and access to the road rescue service it provides. As AA members, motorists can also get a free GSM digital phone with a free in-car battery saver.

AIB's package also includes free Gap insurance which means that if a car is written off and the subsequent claim payment does not meet the value of the outstanding Accelerator finance, the gap insurance will pay the difference up to a maximum of £5,000.

In addition, the Accelerator package offers £50 off the next car insurance premium with Guardian Insurance.

AIB's product development manager, Mr Michael Mansfield, says response to the package, which has been on offer since December 1st, has been phenomenal.

Several other banks offer discounts if insurance is taken out with a particular company.

National Irish Bank offers £30 off the first year's premium when motor insurance is bought through First Call Direct. The insurance group will also throw in a free mobile phone with free connection to Eircell, leather case and in-car charger.

TSB is currently developing a car finance package which will be available from the end of January and will include a 20 per cent discount on a Touchline insurance premium and a free personal accident plan with Signa Insurance.

And there is no need to end up stranded in the middle of nowhere if that reliable little runabout car doesn't live up to its billing.

Free emergency rescue for a year is another recurrent feature in the various packages on offer.

An Irish Permanent loan includes free membership of RAC Ireland while the packages from Ulster Bank, Bank of Ireland and TSB also include motor assistance services.

If the borrower is feeling lucky, Bank of Ireland's Motorloan package offers the opportunity to win one of five Toyota Corolla Liftbacks before March 31st while Irish Permanent is offering three Opel Corsas in conjunction with a number of radio stations.