Motorists could waste £174 million on car finances

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Motorists could waste £174 million on car finances

Wed 13th Feb 2008

New research from uSwitch.com has found that UK motorists who take out expensive car dealer finance are set to waste up to £1,094 each, a total of £174 million.

Over 2.4 million cars were sold in the UK last year, with almost 19% of those sold in March when the new year's registration comes in.

A similar number is expected to be sold this year, but the price comparison and switching website warns customers that a credit deal from a car dealer is likely to prove more costly than taking out a low-rate personal loan.

To illustrate its point uSwitch.com gives the example of a motorist borrowing £10,270 towards the cost of a new VW Golf: they would pay £2,162 in interest over three years through the finance deal offered by Carselect, but only £1,068 over the same period with a personal loan from Moneyback Bank - a saving of £1,094.

Mike Naylor, personal finance director at uSwitch.com, suggests that "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".

A recent study from uSwitch.com also found that consumers could save money by switching loans mid-term.

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