Driving a Deal for a Sexy 06
Peter Sharples
MORE than 400,000 new cars are expected to hit the road next month as motorists
clamour to be among the first with a new 06 registration.
According to the Society of Motor Manufacturers and Traders, March is the peak month
of the year for new car sales.
If you're one of the lucky few who can walk into the showroom, pay the asking price
with ready cash and drive out in the latest sporty set of wheels, all well and good.
But most of us aren't so lucky. Too many people get carried away with the engine
size, the colour of their dream car or just the salesman's patter and don't give
a second thought to how much they could trim off the cost.
Steve Gracey of Alliance & Leicester says one in five new car buyers in Manchester
still opt for the finance package on offer from the showroom, with 33 per cent
genuinely believing they're getting the best deal available.
Dealerships can make up to £500,000 in a year from selling motor finance
and often there is no fixed rate for customers walking in off the street.
If you are prepared to go for the showroom deal it may be wise to discuss a rate
before starting negotiations, as the likelihood is that you'll be offered something
different to the person who's just walked out of the door before you.
The average APR on a hire purchase agreement financed through dealerships ranges
from 12.4 to 12.8 per cent. In contrast, the cheapest loan rate available is
5.5 per cent from Moneyback Bank, while at least 10 lenders are prepared to advance
money at less than 5.9 per cent to borrowers with no blemishes on their credit
profile.
Stuart Glendinning, director of personal loans at price comparison site, moneysupermarket.com,
says the market is awash with rates below six per cent APR.
"A price war for loans is great news for consumers looking for a low personal
loan rate," he says.
Sean Gardner, pictured, right chief executive of another comparison website,
MoneyExpert.com, says buying a car is one of the biggest financial commitments
aside from buying a house and it should be entered into very carefully.
"Our figures show the average loan taken out can be as much as £13,000
and even for second-hand cars it can be between £6,200 and £8,500," says
Mr Gardner.
"We urge anyone borrowing to buy a car to look around carefully for the cheapest
finance available. There are some great deals to be had. Unfortunately there are
also some pretty bad deals too."
Someone borrowing £10,000 over three years at a typical rate of 5.7 per
cent without payment protection insurance would pay £302.21 a month and
in total repay £10,879.56.
If they were paying the average showroom finance rate of 12.4 per cent they would
pay £330.93 a month and repay in total £11,913.48.
The extra cost would be £1,033.92.
But before you even contemplate how you're going to pay for your new car it's
worth doing some research into the cut-price deals available.
"Buying a car online can save you up to £5,000 and it can actually be
a lot easier too," says Terry Hogan, managing director of New-Car-Discount.com
"On the internet, the need for a negotiation is removed. Walking into a car
showroom can be daunting.
"If you're female, for example, you may feel uncomfortable being approached
by male-only salesmen.
"Purchasing online can be time effective and non-discriminatory. However,
if you're concerned about security, always make sure that you can speak to the
provider by phone and can speak to previous customers to assess credibility."
