Consumers urged to shop around for car loans

Motorists who fail to shop around for car finance can end up paying thousands of pounds more in interest repayments, it has been claimed.

New research conducted by Moneyfacts.co.uk found that on a car loan for £5,000 the difference in repayments between the cheapest and most expensive loans is £769.

The difference is even more marked for loans of £10,000, which can result in a car buyer paying up to £2,400 more than they need to.

Michelle Slade, analyst at Moneyfacts.co.uk, urged consumers to take a more proactive approach to securing the best financing deal to avoid making "a costly mistake".

Ms Slade said: "Before opting for the convenience of forecourt finance, it''s worth checking out how this compares with other deals on the market.

"There are over 40 providers offering a range of unsecured loans and many offer different rates depending on if you apply online or over the telephone."

The site named the cheapest provider of loans of £5,000 over three years as Sainsbury''s Bank.