New car buyers add £520 to the cost of their car by not shopping around for finance

5 Sep, 2016

Research from Swedish savings and loans provider, Ikano Bank shows motorists who don’t shop around for the best loan deals when buying a new car add an average of £520 to the cost of their purchase – the equivalent of over 500 litres of petrol or almost six months’ worth of petrol.

The introduction of the new “66” number plates in September is expected to spur on a rush of new vehicle purchases. In March this year, when the latest registration plates were released, sales of new cars spiked by 5.3%**, making it the biggest increase since the bi-annual plate change began in 1999, according to the Society of Motor Manufacturers and Traders (SMMT).

But research from Ikano Bank, which has its UK headquarters in Nottingham, reveals that motorists are losing out by not shopping around for the best deal before choosing how to finance their new car:

  • Just over a fifth (22%) chose the cheapest finance option available
  • More than a quarter (27%) choose the easiest option instead
  • A third (32%) research how to pay for a new set of wheels in less than 15 minutes
  • This compares to a third (31%) who spent between a week and a month researching which car to buy and a fifth (19%) who spent between one and six months
  • Younger people are much more likely to spend more time researching how to finance their new car, with 83% of those aged 18-34 spending more than 15 minutes, compared to 52% of those aged over 65
  • This means motorists are adding on average £520 to the cost of their car, by not shopping around for the best finance deal.

A spokesman from Ikano Bank said: “We’re a nation of car lovers, and vehicle sales have previously risen considerably following the introduction of new number plates.

“But sadly, we’re not as smart about it as we should be. Despite spending months researching new cars, we’re much more impulsive when it comes to budgeting.

“People often opt to take finance directly from their car dealer and don’t realise that very often, this isn’t the best option available. Securing finance for a car can be completely separate from the purchase of the car itself.”

Ikano Bank’s own internal data shows that customers take out a loan to buy a car more than any other purpose and the products offered by the bank provide a headline rate of 3.2% APR Representative (on loans from £7,500 – £15,000).