Motorists set to waste millions on showroom finance
- Published: 15/08/2007
Motorists are set to waste more than £175 million by signing up to showroom finance deals when buying their new '57 registration cars on September 1st, a new report reveals.
A study from uSwitch.com claims that consumers could end up wasting around £985 each on unnecessary interest payments by choosing over-priced deals from the car showroom instead of a lower-rate personal loan.
It provides the example of a customer borrowing £6,995 towards the cost of a Ford Fiesta. They would pay £1,131 more in interest through taking out a loan at 12 per cent APR from Perry's dealership than they would if they were to borrow from MoneyBack Bank at 6.3 per cent APR.
"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," Mike Naylor, Personal Finance expert at price comparison and switching website uSwitch.com, said.
"Finding a competitive loan could save consumers almost 15 per cent 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."
A study from uSwitch.com claims that consumers could end up wasting around £985 each on unnecessary interest payments by choosing over-priced deals from the car showroom instead of a lower-rate personal loan.
It provides the example of a customer borrowing £6,995 towards the cost of a Ford Fiesta. They would pay £1,131 more in interest through taking out a loan at 12 per cent APR from Perry's dealership than they would if they were to borrow from MoneyBack Bank at 6.3 per cent APR.
"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," Mike Naylor, Personal Finance expert at price comparison and switching website uSwitch.com, said.
"Finding a competitive loan could save consumers almost 15 per cent 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."