Importance of choosing the right car loan

This week sees the launch of the new 58 car registration plates, and given the current economic climate it's important that buyers get the best car loan deal available to them.

Michelle Slade, analyst at Moneyfacts.co.uk, says: "Getting the finance choice wrong could prove a costly mistake ... 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.

"On a £5K loan, the difference between choosing the best and worst loan deal could cost you an extra £769, while the wrong choice on a £10K loan could see you out of pocket by more than £2.4K - or to put it another way, increases the cost of financing your car by a massive 14%."

Importantly, the advertised rate on most car loans is a typical APR, and whether you qualify for it depends on your credit score. Car loan customers should always shop around to make sure they're getting the best deal. The total repayment figure should be considered, along with any payment protection insurance, to get the full picture of which car loan option offers the best value.