Consumers who spend a lot of time choosing new cars should be very careful when choosing their financial methods, according to finance experts.
Mr Amlot, senior editor at MonyExtra.com said, "If carbuyers arranged their finances before visiting a forecourt, they ‘will enjoy every mile in their new car and be certain that they are getting more metal for their money.’"
"Drivers should not let the smell of a new leather interior lure them into poor financial decisions at the last hurdle," he added.
The most common method of car finance is HP (hire purchase) as it is commonly offered by car dealerships and the loan is secured against the car itself.
However, HP has distinct disadvantages in that the buyers do not get the full ownership of the car until the final payment has been made. This means that if the buyer defaults on any repayments, the finance company can issue a default notice. Another disadvantage is that average APRs for HP agreements are higher than some personal loan rates.
Those that choose the personal loan route may find themselves in a better position on the forecourt to strike a deal than those that do not, simply because they are classed as "cash buyers". The additional bargaining power that comes with such a position may mean a model with more features or a significant sum of money off the price.
Perrsonal loans should be a consideration because of lower interest rates and consumers might find themselves in a better position as personal loans are not subjected to any arrangement fees which means "more car for your money ".
