Buying a Car? Personal Loan vs. Dealer Finance

Once you have chosen the make, model, year, colour and type of mats you want or your new car you could be forgiven for hoping that the methods of payment are all much of a muchness.

Maybe it is because of the number of decisions that have go into buying a new car, that Dealer Finance can often seem like a good idea – after all they want you to buy the car and pay for it, so it stands to reason the finance package should be as quick, simple and cheap as possible.

Many people spend hours hunting down the best bargain they can for the make and model of their choice and negotiate with the dealer for extras thrown in and special discounts - and then forget to think how much extra they might end up paying if they do not get the cheapest form of finance. It makes sense to get the cheapest deal and it is important to do this both when buying a car for yourself and/or when buying one for your business.

It’s Not. Consider a Personal Loan
The idea that dealership finance is the quickest and easiest way to finance the purchase of a new car is a complete myth. Dealers have to carry out the same background checks as any other credit providing company.

In addition, it is usually significantly more expensive to use an in-house dealer finance package than to take a personal loan from a dedicated financial services provider. So there are no advantages for you - but lots of benefits for the dealer. Why line his pockets?

Claire Alvey, personal loans manager for Alliance & Leicester, states that although the amount of people taking out dealer finance has not decreased since last year, they will continue to highlight the uncompetitive nature of car dealer finance.

"We hope that people take the time to find the best deal to avoid overpaying more than £1,800 per car bought on dealer finance. This could mean saving £20,000 in a lifetime" said Alvey.

So if you’re considering buying a new car, it might be worth reversing your decision to use dealership finance and as we've tried to indicate, give way to having to research the personal loans on the market for the most competitive deal. This can be a time consuming process.And don’t give up until you have exhausted all the leading suppliers (sorry!).