Car Loans : Shop for a Better Deal

With the new 2005 registration coming into force this month many consumers will be looking for a great car loan to finance that new car. A new car can be a shrewd investment lowering running costs and making our lives easier and less stressful when getting to work or taking the children to school. Considering how long some of us spend travelling it can be worth getting finance for the peace of mind a new car can offer.

However it seems a lot of consumers are not necessarily getting a good deal when it comes to their car loan. Quite the opposite in fact, some consumers are spending up to £20,000 over and above what they should be for their car finance package. Shocking news when you consider what many car owners could be spending that money on; deposit on a property, property improvements or even a holiday to relax from the stress of driving through all that good British traffic.

What's causing this unnecessary debt for consumers who essentially just want a more comfortable drive to work or the supermarket? Dealership finance is the answer; two thirds of consumers take the dealership finance package when purchasing their new vehicle. Car finance from the dealership rarely gives you a good deal on your car loan and usually ends up costing significantly more, siphoning money you could be using more effectively elsewhere and adding considerably to the overall cost of your new car.

Is dealership finance really that bad for the consumer? After all we usually chose it for a good reason. Its convenient for one thing, you can go to your local dealership, pick out your ideal car and arrange your car loan all at once and all through the same company. In addition one fifth of consumers believe that by conducting all their finance through the dealership they'll earn perks on their car deal in the form of discounts or freebies.

When you compare the costs of car finance it becomes clear that the discounts and freebies you might gain aren't really worth it. Average APR for a car loan from your dealership comes in at 12.4% while some of the great personal loan deals on offer currently come in at 5.9% from companies such as Barclaycard and Direct Line. That's just two companies out of many who offer similarly great UK car loan deals. Let's face it shopping around for a better deal is worth it in the long run if you have an extra £1,500 a year to spend however you chose. Not to mention the satisfaction of getting a great deal when you drive away from the forecourt. .

23/3/05