Car Finance - Save money and don't go through the dealers

With the new '06 car registration plates being introduced next week, motorists are being warned by Alliance & Leicester that taking out pricey finance from a car dealer could mean significant overpaying.

The mortgage bank's research has found that 49% of all motorists borrow money when they buy a new, or nearly new car. Of these 17% use car dealer finance, with 73% making this a lifetime habit.

With the average car now costing just under £12,000 and the average motorist buying 11 new or nearly new cars in a lifetime, the ensuing waste of using car dealer finance could be very significant unless you are prepared to shop around for the finance.

Of the 7.5 million motorists who get into the habit of automatically taking dealer finance, 33% believe that the finance offered by the dealer is the most competitive deal, while 9% said the salesman convinced them it was the best deal available.

Depressingly, few motorists shop around to find the best finance deal for their motor, with just 32% spending time to consider more than two different finance deals. 11% look at just one or two and 9% don't shop around at all.

It seems that many motorists are more interested in creature comforts than they are with getting a good deal. 18% people said that they would buy a car on the basis that it has air conditioning, yet only 14% said a good finance package would persuade them to buy the car in question.

Other reasons why consumers automatically take out dealer and overpay include:

1- It's the quickest and easiest way to finance their car (53%).

2- It means they will get a discount on their new car (23%).

3- They would get some freebies with their new car (18%).

Click here for a list of low cost loans that could be used finance the puchase of a car