13 August 2008
Personal loans offer better value than dealership finance for motorists thinking of buying a new car, according to uSwitch.com. The independent price comparison site said last September - when 20% of the year's new car purchases were made - 50% of motorists used dealer finance. If this trend is repeated this September, drivers look set to waste a collective £168 million in interest payments, uSwitch.com calculated. A personal loan could be a better option, it claimed, as the average rate of interest on car dealership finance is 10.17% APR, while the cheapest personal loan is available at just 7.4% APR. Choosing a personal loan over dealership finance could therefore save motorists up to £826 a year in interest payments. Simeon Linstead, Head of Personal Finance at uSwitch.com, said: "Shopping around for a competitive loan before shopping around for the car is essential. "Buying a brand new car is a big expense which can be seriously inflated if the financial arrangements are not researched thoroughly." Figures from the Society of Motor Manufacturers and Traders show that sales of new cars fell by 13% in July.