Payment as important as purchase

Consumers who invest a lot of time in choosing a car should be equally careful when selecting their financing method, according to finance experts.

While the most common form of forecourt finance is quick and easy to arrange, it is not always the best deal according to MoneyExpert.com.

Hire Purchase agreements, in which the loan is secured against the car and the car is not owned until the last payment, can be set up at the car dealers, but often have APRs in double digits.

Dealerships themselves also offer the possibility of deferring a portion of the car’s value until the end of the term when the buyer can choose to pay the sum, return the car or swap it for another.

While this scheme does involve lower repayments, it is only suitable for buyers who are aware of and can predict their financial situation.

According to MoneyExpert.com, the best option is to look ahead and get an agreement on principle on a personal loan.

Personal loans do not carry arrangement fees, have lower APRs, and walking into the dealership with an approved loan can give the buyer leverage in price negotiations as they will be treated as a cash buyer.

Robin Amlot, senior editor at Moneyextra, concluded: "Drivers should not let the smell of a new leather interior lure them into poor financial decisions at the last hurdle.

"By taking the time to arrange finance before visiting the forecourt, motorists can be sure that they will enjoy every mile in their new car and be certain that they are getting more metal for their money."