Motorists wasting millions on car finance
UK motorists are set to waste almost £174m by signing up to car dealer finance when they buy their new registration cars in March, according to uSwitch.com.
More than 2.4 million cars were sold in the UK last year, with almost 19% sold in March alone. With a similar number expected to be sold again this year, the research reveals that consumers could waste up to £1,094 each in unnecessary interest payments if they opt for the more expensive credit deal from the car dealer instead of taking out a low-rate personal loan.
For example, a motorist borrowing £10,270 towards the cost of one of Britain’s best selling cars, the VW Golf (costing £11,411 on the road with a £1,141 deposit), would pay 9.4% APR through the finance deal offered by Carselect, costing £2,162 in interest over three years.
However, financing the purchase with a personal loan from Moneyback Bank, currently offering one of the most competitive loans on the market at a typical APR of 6.7%, the total amount paid in interest would be £1,068 – a saving of £1,094.
Mike Naylor, personal finance spokesman at uSwitch.com, said: “Brand new cars are already a big expense but consumers can unwittingly inflate the purchase price by up to £1,100 by choosing the wrong finance deal.
“However, there is a simple win-win solution. Finding a competitive loan and having the money ready to buy the car immediately will not only ensure that people get cheaper finance but it also gives them more bargaining power to get the best purchase price. Just because a car dealer can offer you a good deal on a new car, it doesn’t always mean that they will offer the best deal to finance it.”