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Car Loans 'Could Save Britons A Bundle On A New Car'

Aug 29, 2007
With the launch of the new 57 number plates approaching, many UK consumers could be tempted to head to the country's car showrooms to buy themselves a new car, or look to make a bit of a saving by purchasing 07 plated models. However, according to moneysupermarket, if these consumers do not make the most of cheap car loans to finance their purchase, opting for forecourt finance or similar instead, they could find themselves paying a lot more than they bargained for.

The online comparison site has said that those consumers that opt for forecourt finance rather than a low cost car loan could be paying in the region of 140 million pounds in interest payments collectively, with 405,000 people expected to buy a new vehicle in September as a result of the new number plates coming on to the market.

Tim Moss, head of loans at moneysupermarket, said: "New car buyers need to do the sums before taking out car finance or risk being taken for a ride. Taking out a low-rate personal loan will help them avoid paying over the odds." Indeed, the site offers that someone purchasing a car for 14,000 pounds using forecourt finance at 7.9 per cent APR can expect to repay a total of 15,707 pounds over a three-year period. However, using a car loan to purchase a new motor could see repayments of 15,361 pounds based on a 6.3 per cent APR loan.

With a number of people no doubt looking to buy a used car rather than a brand new motor at this time, Halifax has also been emphasising the benefits of borrowing through a loan rather than the use of forecourt finance, suggesting potential buyers should spend a similar amount of time shopping for finance as they do looking for their next vehicle. Neil Chandler, head of personal loans at the financial services provider, said: "It makes sense to take your time and choose the right used car, but buyers should also ensure they do the same when it comes to financing it. With a Halifax loan, customers do not need to make payments for the first three months, which will help when it comes to sorting out road tax and other expenses."

Halifax has also urged potential car buyers to take into account a number of things related to the finance option that they choose. Issues such as balloon payments - where the payment at the end of the loan is much larger than previous payments - should be considered, as should looking out for any special features a loan might have to make paying for the extras associated with a new vehicle purchase easier. Barclays meanwhile has launched a car loan product aimed specifically at motorists, which includes a discount on breakdown cover.

Earlier this year, research from Experian showed that women were price-driven when looking for a second-hand car, suggesting they could be making good use of a car loan to get a great value-for-money motor. It was revealed that men are likely to pay more for a certain make and model than their female counterparts.
About the Author
Steve Smith writes for 1 stop finance shop where visitors can apply for UK secured loans and also focuses on personal loansand bad credit loans for UK residents.
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