New car, new 08 plates, old insurance

March sees the new-car market hot up as the new 08 plates come in, but while drivers are readily shopping round for new cars – with a fifth of all sales jammed into March – they are failing to motor around firms for finance and insurance.

Comparing car insurance quotes is now common practice among drivers – knowing they could save a few bob especially as petrol prices soar – but many motorists are losing out by not shopping round for finance or protection insurance on loans.

"Motorists everywhere are now searching garages all across the country to find the best deal for the new 08 plate cars," said Michelle Slade at financial information service Moneyfacts.co.uk.

"Unfortunately, the same effort is rarely put into sorting out the best finance for the car and getting this wrong can be an extremely costly mistake."

Figures from Moneyfacts show £3,000 difference between the best and worst personal loans of £15,000, and with forecourt finance packages among the most uncompetitive it is worth doing the footwork for loans as well as the car itself.

Payment protection insurance on loans can also take a bite out of your finances – which is often missed by consumers as it is thrown in the loan by a lender.

"Payment protection does not have to be taken out with a loan," said Ms Slade.

"When shopping around, make sure that you compare the total repayments, particularly when opting for provider's insurance."

For consumers wanting the peace or mind offered by payment protection insurance – which should help to cover loan repayments if a job is lost or a policyholder cannot work due to illness or injury – the advice is to shop around for independent providers of cover, and not just a lender.

"Independent providers such as Paymentcare or British Insurance offer a more flexible product at a fraction of the cost," advised Ms Slade.

The cheapest average £15,000 loan over five years (from Moneyback Bank) with independent payment protection insurance (from Paymentcare) costs £309.94 a month or £18,596.40 in total.

However, the cheapest loan and payment protection from a single lender (Barclaycard) costs £340.14 a month or £20,408.40 in total. Furthermore, the most expensive protection and loan deal (from Northern Rock) costs £430.43 a month or £25,825.80 in total.

Ms Slade said: "Doing the research into the finances for that new car before you visit the forecourt will help you make an informed choice and with the savings you have made, you could afford to pay for some of those optional extras."

Shopping round for car insurance is also imperative.

Some car dealers will offer free car insurance as a part of deal. However, if you are already covered try to beat them down on the cost of the car.

In the meantime, shop around for car insurance cover.

The advice is to take advantage of price comparison websites, but also make sure you do not only focus on price, but also cover.

Drivers looking for a new car with an 08 number plate are being urged to look at the small print of any car insurance policies.

Car insurer esure has now issued tips for those looking to buy a new car.

• Shop around - Should shop around for insurance quotes before buying a car, as well as contacting your current insurer to see by how much their current premium will be affected to ensure that it’s affordable.
• Go online - The best discounts are often available online rather than over the phone.
• Do your homework - Motorists can cut the cost of their insurance by: finding out the car’s insurance group (the higher the group, the higher the premium); checking the level of security that comes as standard and considering fitting a tracking device; and not adding modifications that could either void or increase insurance costs.
• Read the small print – Shop around for cover as well as price.
• Review annual mileage – Motorists should regularly review their annual mileage to make sure they’re not paying more than they should by over-estimating, especially if their circumstances change – such as a new job or starting a family.

Mike Pickard, head of risk and underwriting for esure, said: "We’re known for being a nation of bargain hunters and are always out to get the best deal - but when it comes to buying a new car so many motorists are failing to put the theory into practice, especially women.

"It’s crucial for all motorists looking to buy a new 08 plate to do their homework, shop around for the best deals and be both confident and clued up in front of a salesperson – or else pay the price."