Save £985 on a new car

Wednesday, 15 August 2007 12:00

Motorists can save £985 when buying a new 57-registration car this September, research out today reveals.

Figures from comparison website uSwitch.com show a cheap personal loan would save car buyers a collective £1.75 million by avoiding more expensive forecourt finance.

The average loan rate for car showrooms is around 10.8 per cent, the website finds, compared with 6.3 per cent for the best-available personal loan.

This could see someone taking out a loan of £6,995 to buy the most popular car in the UK - the Ford Fiesta - being charged £1,131 extra in interest payments over five years, at a dealership rate of 12 per cent.

"Finance deals offered by car dealerships can be expensive, and unwitting motorists could end up paying as much as £1,131 extra for their dream car," commented Mike Naylor, personal finance expert at uSwitch.

"However, there is a simple win-win solution. Finding a competitive loan could save consumers almost 15 per cent off the price of a new car through the savings made on interest repayments, additionally, having the money ready to buy the car will also give them more bargaining power to get the best purchase price.

"Just because a car dealer can offer you the best deal on a new car, it doesn't mean that they will offer you the best deal to finance it."

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