Consider how you will pay for your new vehicle before buying will save you some money. While it true that you will ultimately drive away in your new car, it in not true that all credit options will end up costing the same amount.
Depending on where your finance comes from, you might pay off the loan in a few months or save some money on interest. For hassle free borrowing with great rates and reasonable repayment periods, it is probably best to go to a lending company rather than risking ruining relationships with friends or family.
Interestingly, a recent study discovered that there is a huge gap in the age difference between people financing loans through the dealership and through banks loans. Younger customers greatly favour the better deals provided by the latter while older customers tend to fool for the dealership loans trap.
We compared a number of examples from well known high street banks and found that Alliance & Leicester currently offers the most competitive car loans at 6.9% APR Typical for personal loans between £7,500 and £20,000 (as of 20/09.2007). Applying Online is also simple and takes 10 minutes and you could have a decision within the hour so can be as quick as using the dealership. However, unlike the car dealership loan, such personal loans are usually a simple interest loan with no hidden charges.
Car Loans Compared*
New customers taking £7,500 over 60 months
| APR Typical | Monthly Cost | Total Payable | Savings |
Alliance & Leicester | 6.9% | £147.55 | £8,853.00 | - |
Lloyds TSB | 7.4% | £149.23 | £8,953.80 | £100.80 |
Abbey | 7.9% | £150.74 | £9,044.40 | £191.40 |
Egg | 9.9% | £157.57 | £9,454.20 | £601.20 |
Black Horse | 11.9% | £164.57 | £9,874.20 | £1,021.20 |
Source of competitor data: Moneyfacts.co.uk - the money search engine 23.07.07
With loans rates changing as dynamically as they do these days, it's always worth visiting a comparison engine such as Motley Fool in order to compare loans for the best current rates.
If you are lucky enough to be able to borrow from a family member or friend, this is worth considering. Such personal deals come with competitive interest rates or interest free, not to mention easy, quick and very flexible terms at times and a far more personalised service that any bank could provide.
