Nation to take out £9.4bn in car loans

Sainsbury’s Bank estimates that some £9.4 billion of personal loans will be taken out to buy cars between last month and next March, but many people will pay over the odds because they won’t choose a competitive rate.

Indeed, over a third - 37.8 per cent - of people who have taken out a loan in the last five years admit that they only got one quote therefore risking paying over the odds. A further 13 per cent said they got only two quotes.

Steven Baillie, Loans Manager, Sainsbury’s Bank, said: "Loans can be a useful way to spread the cost of a major purchase like a car, but millions of people could still be throwing money away by not comparing interest rates when taking out a loan.

"With so many providers now offering quotes online, it can be really quick to shop around for a good deal. Our internet loans start from just 6.1% APR typical. By shopping around, you could reduce the APR on your loan by up to 38% and save over £1,000 in repayments."

Twenty seven per cent of people buying a car said they would be taking out a loan to finance part or all of the cost of the car. Of those, almost half, 49 per cent, said they would finance between a quarter and a half of the cost with a loan; whilst one in five said they would finance between three quarters and the whole cost of their car that way.

In addition to some of the most competitive rates in the market, customers taking out a loan with Sainsbury’s Bank can choose to make no repayments for the first three months; receive an instant decision online; and have their cheque delivered to their door within 24 hours.