RAC Warranty has introduced an interest-free warranty product, applicable to all extended motor warranties.

Customers can select a 12, 24, or 26-month warranty, paid for in equal monthly amounts over 10 months.

Ian Simpson, sales and marketing director at RAC Warranty, said: "While sales of extended warranties have been consistently high ever since the credit crunch, there is a group of used car customers who do not take the product because they are wary of the upfront cost or do not want to include it in their overall finance package.

"The interest-free option provides a new route to extended warranty cover for this group of customers. We believe that this is a very convincing proposition and are very excited about the possibilities that it offers."

The car insurance brand, operated by the RAC and The Warranty Group, estimates its work with independent used car dealers, car supermarkets, franchises and manufacturers has grown by 20% annually since its formation in 2008.