Car finance pays for half of all new cars

Research from price comparison website uSwitch.com has revealed that half of all new car purchases are made possible by car finance. However, UK drivers could be wasting a collective £168 million by not shopping around for the best deal.

Customers who opt for the car finance offered by their garage will pay an average APR of 10.17 per cent. Shopping around for an unsecured loan or a better deal on car finance from a different provider could bring the APR down to as little as 7.4 per cent.

Simeon Linstead, head of personal finance at uSwitch.com said: "Shopping around for 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. Trusting consumers may think that purchasing a vehicle from a reputable dealer also means they will be offered the most competitive finance deal - but this is certainly not the case.

"Paying over the top for finance is one expense that can be easily avoided. This really is a case of 'act in haste, repent at leisure' as a loan from the dealer could cost the consumer as much as £1,000 extra in interest. Having the money available before choosing a new vehicle can also add to your bargaining power when on the forecourt - you may find you are able to drive down the cost of the car as you strike an immediate deal."