‘Vital’ to choose the right loan when financing your car

An expert has warned that drivers could be paying 14 per cent more than they need to when buying a car, just by choosing the wrong loan.

Michelle Slade, analyst at Moneyfacts.co.uk, thinks that it is unwise for consumers to just blindly plump for the convenience of forecourt finance and pointed out that there are over 40 providers offering a range of unsecured loans.

Recent Moneyfacts.co.uk research has shown that, on a £5,000 loan, the difference between choosing the best and worst loan deal could cost you an extra £769.

The wrong choice on a £10K loan could see you out of pocket to the tune of £2,400 – or increase the cost of financing your car by a massive 14 per cent.

Ms Slade urged prospective car buyers to use the total repayment figure to compare deals.

She said: "Don’t be fooled by specialist car loan deals. Often the freebies, discounts or perks don’t make economical sense if you have to pay a higher interest rate.

"Cars suffer rapid depreciation, so make sure that you don’t find yourself still paying for your car long after it has reached the scrap yard."

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