Brits To Go On Car Buying Spree in September

According to figures recently released by the Halifax, one in ten UK motorists will purchase a new car this year. Almost half a million of these new cars will be purchased next month (September) alone, when the latest trendy UK number-plates come out.

Replacing their old cars with all these new cars also means that there is a very active and vibrant second-hand car market in the UK, with approximately one in three UK motorist deciding that this year will be a good time to swap their car. In total, the amount we spend each year in the UK on buying cars (both brand new and second-hand) amounts to an amazing £36 billion, or £1,500 per UK household.

Most of the cars bought each year in the UK are likely to be financed with some form of car loan and with purchasing a car now widely being considered as the second biggest purchase we’re likely to make in the UK (after out homes), making sure that we get the right financing package to suit is vital.

Those of us running off to the dealer next month to buy our brand new car with its brand new number-plate might be sorely tempted to look into the dealer financing package. Be careful though, if the dealer financing package sounds too good to be true then it most probably is! It’s also worth remembering that you can nearly always get a cheaper car loan somewhere else. Today you can normally apply for cheaper car loans on the internet than even the best car loan deals that dealer offer.

The reason why this is the case is because arranging your car loan through a car dealer means that you not only have to pay the car dealer interest on the car loan but you’ll also have to pay interest to the business who the car dealer has arranged the car loan with. Because of this, interest on car dealer arranged car loans can run into the double-digits yearly. Interest on a car loan arranged online or through your bank on the other hand shouldn’t be more than 5-6%, and that’s with the latest rise in interest rates. That’s almost half the yearly interest cost that care dealer loans are currently charging.

As if that wasn’t enough of a carrot to entice you to get a car loan arranged online or through your bank, some UK car loan lenders will agree that you do not need to start repaying your UK car loan until 3 months after you’ve bought the car. This should give you plenty of time to sort out of the nagging little extras that always come with buying a new car, like arranging for the road tax and insurance, before you get burdened down with making car loan repayments.

A final reason why buying your new car this year with an online or bank arranged car loan is because it makes you a “cash” buyer with the dealer, which should mean that you can arrange for lots of nice extras to be installed in your car free of charge. As a cash buyer you may even be able to negotiate some form of discount on the sticker price.

Richard Smith
28th August 2006