Many motorists are eagerly awaiting the arrival of the '57' car registration plate on 1st September. More than 400,000 orders for new cars are expected to be made over the next few weeks, which is about one fifth of annual sales.
Many would have spent hours researching the make, model, vehicle specifications, deciding on the colour and finding the cheapest price for the car of their choice, yet all that good work could be undone by failing to shop around for the finance to pay for the vehicle.
As many as 180,000 new cars will be purchased on car showroom finance deals next month, despite the interest rates they offer being on average around a third higher than the best personal loan deals on the market. Car finance deals taken out in the showroom could add around 15% to the purchase cost, making it an expensive mistake.
According the financial analyst Uswitch, the average car showroom finance deal charges interest at 10.76% APR, which is 4.5% more than the market leading rates for personal loans. They estimate drivers will waste around £175m by opting to get their finance on the forecourt.
Take one example of a motorist purchasing a new Ford Fiesta at £7,995 from Perrys car dealership. They would be charged 12% APR* for finance, which mean a cost of £2,282 in interest charges over five years. If the motorist had instead shopped around and took out a car loan from MoneyBack Bank, which is currently the most competitive loan on the market at 6.3%*, they would incur interest of just £1,150 - a substantial saving of £1,313. (*rates quoted are correct as of 28/08/07)
The market for personal loans is fiercely competitive. You can use the compare loans tool at the top of this page to check out the current marketing leading products.