PERSONAL FINANCE: Shop around for Best Deal to Buy Your New Car
Byline: By John Cranage Personal Finance Editor
Motorists will be flocking to the car showrooms this weekend following the launch of the new "56" registration plate yesterday .
However, financial experts warn they run the risk of paying thousands of pounds over the odds if they do not consider the best means of funding the purchase of their new cars.
"If you're happy to spend ages finding the right car, why not apply similar logic to your search for vehicle finance?" says Lisa Taylor, an analyst at Moneyfacts.co.uk.
"With a little time spent to secure the best finance deal, you could have paid for extra upgrades, such as a climate pack or spoiler."
Spending on cars has surged by 61 per cent during the last decade to more than pounds 36.4 billion a year - equal to 4.5 per cent of total household disposable income - according to recent research from the Halifax.
At the same time, the number of vehicles on Britain's roads has increased by 22 per cent to 30.6 million.
About 400,000 new cars are expected to be registered in the wake of the September plate change, at an average cost of pounds 13,000, according to the Society of Motor Manufacturers and Traders.
That, in turn, will release a flood of used cars on to the market, at an average cost of pounds 5,500.
Taken together, new and used car sales following the introduction of the new plate will see a staggering pounds 11.25 billion change hands on Britain's forecourts.
Whichever make and model you plump for, the good news is that you should now get more for your money.
Vehicle prices have fallen by six per cent since 1995, the Halifax data shows.
That's in part due to the Competition Commission's ruling in 2001 that UK prices were too high, particularly among small vehicles such as the Volkswagen Golf and Vauxhall Astra.
However, buying a car remains the second largest purchase most people will make behind a house and most drivers have to borrow to meet the cost.
Fail to fully research the finance options available, and you could be throwing money down the drain, but with such a choice of routes, from dealer credit and zero per cent finance to loans and hire purchase, it is not surprising that many buyers are bewildered.
The interest-free credit, often with a year's insurance thrown in, offered by many dealers on new cars is obviously the cheapest deal available.
Vauxhall, for example, is offering typical four years' zero per cent finance on selected Corsa, Meriva, Astra, Zafira, Vectra and Signum models until October 3.
However, such deals have a big disadvantage - zero per cent finance and a discount on the purchase price rarely, if ever, go together.
They may also require a hefty deposit and repayment periods can be short.
Customers who can't find the deposit could part-exchange their old cars in some cases but for some it could come down to taking out an unsecured personal loan.
The potential savings, however, might be less than the amount some dealerships are willing to knock off the purchase price for those paying by other means.
Another option is extending your mortgage, but again, this has a downside, for while the loan might be cheap you could end up paying for your car for anything up to 25 years, long after it's been scrapped. …