Brits Urged Not to Pay Over The Odds For Car Loans
Many UK consumers may be paying over the odds by opting for car dealership finance rather than a low interest rate car loan, according to online comparison site, Moneyfacts.co.uk. With the new number plates about to be released for 2007, motorists have been urged to shop around for the best deal possible to finance the purchase of their new car.
Whilst many motorists will endeavour to seek the best purchase price for their new car by scouring dealerships and the Internet, many will lose out on any savings made by opting for dealer finance, with typical APR's of around 10 per cent, which can cost more in the long run than the cheaper unsecured personal loan.
Shunning dealership finance and opting for a car loan can potentially save you more than a £1,000. Those looking to buy a new car have been urged to take advantage of the UK's increasingly competitive personal loans market.
Speaking on behalf of Moneyfacts, Michelle Slade said: "The market for personal loan business is incredibly competitive, allowing consumers to reap the benefits by means of lower rates.
"Although sub-six per cent loans have become almost extinct, there are still some great deals to be found, charging around six to seven per cent, which is only a 1.75 per cent margin over the bank base rate, and is fixed for the duration of the loan."
The savings made with a cheaper car loan as opposed to dealer finance, could be used to purchase extras with your new car. As Ms Slade explained: "With a little time spent to secure the best finance deal, you could have paid for extra upgrades such as a climate pack or spoiler."
However, consumers should bear in mind that when shopping around for a cheap loan, the APR quoted is a typical rate and may not end up the rate you pay.
Ms Slade added: "Around 85 per cent o loans use typical pricing, so bear in mind that the rate advertised may not be the rate you pay, this will be decided by your credit rating."
1st March 2007
Are you looking to purchase a new car? If so, it pays to investigate various funding sources. Car dealers, despite the advertisements, may not always have the best deals on loans and interest rates. Because dealer rates can vary between car models, there can be huge variances in APRs (annual percentage rates). One study found that dealer APRs ranged from zero percent to nearly twenty percent
Once a buyer and seller enter into a contract and agree on a price, the buyer uses the loan proceeds from the direct lender to pay for the vehicle.
How good of a deal are you getting when you choose to lease instead of buy?
Car dealers often advertise very low interest rates on loans to buy their cars. They will also offer grade trade-in deals and free upgrades on certain models. While these offers are all very tempting, you must still shop around carefully when seeking the best deal.