Drivers warned to shop around for car loans
Sep 26, 2006
Drivers could be wasting as much as £1,400 enough to pay for mod cons such as SatNav or air conditioning by signing up to finance packages with car dealers, new research claims.
Almost one in five (18 per cent) of car owners surveyed by one company used finance from a car dealer to buy their car, with 38 per cent choosing it for convenience. Around 24 per cent said that they believed that finance deals from car salesmen were the most competitive around, despite interest rates on these loans often going into double figures. The company calculated that someone borrowing £9,000 with a hire purchase agreement over four years could be paying nearly £1,400 more in interest than someone with a personal loan for the same amount.
The company said they would always recommend that people look into how they would finance their purchase before shopping for a new motor. Having your loan arranged elsewhere and effectively being a cash buyer gives you more bargaining power, so in addition to saving money on your finance, you might even find that you are able to drive a harder bargain and get extras that you wouldn't otherwise be able to negotiate.
However, 53 per cent of drivers with previous experience of buying from a dealer said that they would consider them for future finance. Nearly a quarter of borrowers in southern England admitted to not shopping around for credit, while 60 per cent of borrowers in northern Scotland looked at more than two different lenders
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