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When buying a new motor car there are three options that the buyer can take. They can apply for an unsecured or secured personal loan from a bank or specialist lender, agree to a financial package from the car dealership themselves or part-exchange their current vehicle to reduce the cost of the new car and finance the remaining figure with their own funds.

If you are looking for the option with the potential to save you the most money then we recommend a bank or specialist lender. They should have a vast range of loans for you to choose from with variable APR and repayment terms to meet your circumstances. But do not limit yourself to visiting one or two lenders. We recommend visiting at least four to six loan providers before making your decision. It could save you thousands of pounds in interest payments. As for the purchase of the car, it will be made outright from the car dealership and all monthly repayments will go directly to the lender.

Taking out a finance package with the car dealership can prove to be advantageous. The salesman has it within his power to provide optional extras at no additional cost to the buyer as well as giving generous discounts on the sale price. These benefits often arise if the salesman is either desperate to sell the car in question or needs to meet his sales quota for the month. In which case, you can save thousands of pounds and walk away with a high specification car than original anticipated. The logistics of the procedure are simple enough. The dealership will provide the buyer the ‘loan’ required to purchase the car of which will be repaid via monthly installments. It is fair to compare the car dealership as a bank as that is how they are operating but they have the flexibility to negotiate freely on what the APR should be and how long the repayment term should last.

Part-exchanging your current motor vehicle opens the door to the buyer settling the remaining balance with their own capital. This could well be from savings that they have accumulated over the years or arranging finance from within their own family. Either way it eradicates the chance of going into debt. However, this is not necessarily the most financially rewarding option. Most dealerships are likely to value your motor vehicle under the going rate on the second hand car market. If the dealership purchases your car then they too will need to sell it on so they will want to try and make a profit. So this is more a convenience issue for the buyer, not a financially motivated choice.

If you're looking for a car loan and need it quickly then try Loans UK.