Car financing at the showroom a bad deal

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Car financing at the showroom a bad deal

Fri 25th Feb 2005

Opting for a car financing loan from the showroom could cost more than £2,000 too much, according to a new study.

Consumer finance portal Moneysupermarket.com compared the car financing deals on offer at showrooms with the best personal loans currently available, and found that consumers would be far better off taking out a loan first and then paying for the car.

There are currently 58 personal loan deals available charging seven per cent interest or less, while a typical showroom car finance deal can cost more than 15 per cent.

Moneysupermarket found that a new Ford Mondeo priced at £18,680, could cost more than £22,500 in total if bought with a showroom deal; while the same car bought from the same place using a leading personal loan on offer online could see this reduced to £20,221 - a saving of more than £2,250.

On March 1st, when the car registration changes, consumers could save as much as £6.1 billion by taking out personal loans instead of showroom finance, Moneysupermarket points out.

"Our research shows that accepting the deal offered in car showrooms could be costing motorists a lot of money," said Richard Mason, director of personal loans at Moneysupermarket.

"Purchasing a new car requires research and buyers also need to spend a little time looking at finance deals," he added.

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