Brits Advised To Approach Car Buying 'With Caution'

Those looking to buy a new car next month are being advised
to plan their purchasing wisely.

In figures released earlier this week by uSwitch, thousands
of motorists who are to buy a 57 registration vehicle from
September 1st are set to waste millions of pounds by opting
for uncompetitive forecourt finance deals. As a result of
choosing such an option, above taking out a low-rate
personal loan, Britons could be unnecessarily spending £985
each in interest payments. Overall, consumers were revealed
as losing out to the tune of more than £175 million.
Findings from the firm also showed that 2.3 million cars
were sold across Britain over the course of last year, with
413,991 being bought during September and a similar figure
expected to be sold next month.

A driver taking out just under £7,000 to purchase a Ford
Fiesta 1.4 diesel was indicated as being charged an average
12 per cent in annual interest via a showroom finance deal
offered by Perrys, paying back £2,282.20 over five years.
However, by choosing the same model but plumping for a
cheap personal loan the financial services firm revealed
consumers may only face interest set at 6.3 per cent, with
£1,150 the total interest payable. This in turn could save
them some £1,132.20. Meanwhile, those looking to buy a
Renault Megane could be £1,027 better off by financing
their funding decisions wisely. Savings of £1,076 were said
to be available on a five-door Ford Focus if more
competitive spending options were pursed by British
borrowers.

Mike Naylor, personal finance expert for uSwitch, 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 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. The message couldn't be simpler - don't
pay more for the finance on your new car than you have to."
Consequently he advised those considering buying a vehicle
next month to make use of a price comparison website to
find the most competitive deals possible.

Earlier this year, uSwitch suggested that those 400,000
Britons who purchased a '07′ registration model in
March have lost out on £228 million by opting for expensive
finance options instead of low-rate borrowing. As a result,
Nick White, director of financial services for the price
comparison website, stated those who let the thought of a
shiny new car sway them into choosing a showroom deal out
of plain convenience could find themselves under an
unmanageable "burden" of debt.

"Not only is a personal loan cheaper, by organising the
loan before visiting the car showroom, people will not feel
pressured to get the cash quickly to secure the car of
their dreams," he claimed. Mr White also reported that
opting for a finance forecourt borrowing plan could see
consumers pay interest at some 4.22 per cent above the most
competitively-priced personal loan deals available on the
market and twice the rate set by the Bank of England's
monetary policy committee.

His comments were echoed by Steven Baillie, loans manager
of Sainsbury's Bank. Although statistics from the financial
services provider showed that personal loans are set to
make up 15.8 per cent of all car purchasing over the coming
months he claimed that Britons could still be losing out on
millions of pounds.

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