Personal loans could be better option for car finance, expert claims

Tue, 05 Sep 2006

Personal loans could save money for UK residents when buying a car, an expert has claimed.

Taking out personal loans to fund the purchase, rather than relying on forecourt finance, could mean that less money is "wasted", Alliance & Leicester asserts.

Almost half of borrowers are wasting money when purchasing a vehicle, the bank claims, by using "double digit dealer finance".

Claire Alvey, personal loans manager at Alliance & Leicester, explained: "You don’t have to be a rocket scientist to recognise that choosing finance from a car dealer with an astronomical interest rate could cost the earth."

Ms Alvey continues that motorists could be paying almost £1,400 extra by "allowing themselves to be talked into signing on the dotted line by a silver-tongued salesman".

"Only one in six (17 per cent) borrowers say they would be willing to pay over 6 per cent APR. But when it comes to the crunch car dealer interest rates are often more than double the price limit that most borrowers seem to set themselves," she concluded.

Many UK providers, such as high-street banks and personal loan specialists could offer a better deal for car purchase.


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