Car showroom credit deals cost an extra £1,200 uSwitch calculates
Motorists waste £1,200 on car credit deals
Monday, 12 Feb 2007 15:34
Motorists are set to waste £1,200 on over-priced credit deals on cars with the new 2007 number plates this March, uSwitch warns.
Last March almost half a million new cars were sold, representing a fifth of all new car sales for that year, with over 187,000 bought using a car showroom finance deal.
However, uSwitch finds the average car showroom finance deal charges 10.12 per cent in interest - 4.22 percentage points over the best loan deal.
This adds up to a collective £228 million wasted through car showroom finance deals in March alone, the website calculates.
"A rushed decision or just taking the finance deal offered by the car dealer could turn out to be a long-term financial burden," explained Nick White, uSwitch director of financial services.
He added paying too much for car finance is easy to avoid, with four loans currently available charging less than six per cent APR.
"In fact, by organising the loan before visiting the car showroom, people will not feel pressurised to get the cash quickly to secure the car of their dreams," Mr White advised.
The comparison website works out a motorist borrowing £9,995 to purchase the UK's best selling car - a Ford Focus - from a leading independent dealership would pay £2,698 in interest over five years with the showroom deal of 10.3 per cent.
But with the most competitive loan on the market, charging 5.9 per cent, a motorist would pay £1,538 in interest over the five year term, a saving of £1,160.