Published: 03/03/2006

If you’re looking for a new car it’s easy to fall under the spell of your friendly dealer and accept the car finance scheme on offer. After all if you want the car and can afford the monthly repayments what else have you got to worry about? But before you sign on the dotted line it’s well worth exploring the other options – it could literally save you thousands.

Our research shows that if you opt for your dealers finance you could pay an interest rate well in excess of 10% and in many cases more than double the rates on offer from some of the high street loan providers.

For example if you were looking to buy a new Vauxhall Signum Elegance Navigator costing £19195 (on the road price) the finance deal on offer from Vauxhall would be 11.2% APR over three years (with a 10% deposit), the total amount you will repay is £22172.60. However, if instead you opted for one of the most competitive personal loans currently 5.8% APR with Northern Rock – the total amount repaid would be £18,821.16 offering a huge saving of £3,351.44.

Alternatively an Audi A4 may be more to your taste. The story is slightly better with Audi but the APR is still a whopping 10.9%. Based on an on the road price of £20,480 with a deposit of £5,950 you will repay a total of £16,937.48 over three years compared with £15,830.64 on a personal loan giving a massive saving of £1,142.84.