Motorists set to waste millions on forecourt finance deals
UK motorists are set to waste over £175 million by signing up to car showroom finance deals when they buy their new ‘57’ registration cars on 1st September, reveals uSwitch.com, the independent price comparison and switching service.
More than 2.3 million cars were sold in the UK last year, with nearly a fifth (413,991) sold in September alone. With a similar amount expected to be sold again this year, the research reveals that consumers could waste an average of £985 each in unnecessary interest payments if they opt for over-priced deals from the car showroom instead of taking out a low-rate personal loan.
For example, a motorist borrowing £6,995 towards the cost of one of Britain’s best selling cars, the Ford Fiesta (costing £7,995 on the road), could be charged 12% APR through the finance deal offered by Perrys dealership, costing £2,282.20 in interest over five years. However, financing the same purchase with a personal loan from MoneyBack Bank, who currently offer the most competitive loans on the market at a typical APR of 6.3%, the total interest paid would be £1,150 – a saving of £1,131.
Mike Naylor, Personal Finance expert at price comparison and switching website uSwitch.com, said: “Finance deals offered by car dealerships can be expensive, and unwitting motorists could end up paying as much as £1,131 extra for their dream car. However, there is a simple win-win solution. Finding a competitive loan could save consumers almost 15% off the price of a new car (through the savings made on interest repayments), additionally, having the money ready to buy the car will also give them more bargaining power to get the best purchase price. Just because a car dealer can offer you the best deal on a new car, it doesn’t mean that they will offer you the best deal to finance it.
“The message couldn’t be simpler – don’t pay more for the finance on your new car than you have to. Motorists looking to buy a new car this September should first visit a price comparison website such as uSwitch.com to find the most competitive personal loan to fund their purchase.”