Avoiding forecourt finance

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The 405,000 Brits expected to buy a new car next month could waste a collective £140 million in excess interest payments if they don't choose the cheapest way to finance it.

Deciding what car to buy can be tricky, but determining how to finance the purchase can be a bigger minefield.

Research from price comparison website moneysupermarket.com shows driving off with forecourt finance rather than a low-rate loan could cost British motorists an extra £140 million.

A new car buyer spending an average £14,000 and taking a typical manufacturer's finance deal at 7.9 per cent APR would repay a total of £15,707 over three years.

However, buying the car with a loan at 6.3 per cent APR means they will repay £15,361.2

Tim Moss, head of loans at moneysupermarket.com, said: "New car buyers need to do the sums before taking out car finance or risk being taken for a ride. Taking out a low-rate personal loan will help them avoid paying over the odds."

Watch out for insurance rip-offs too

Moneysupermarket.com also urges drivers who bought a new car last September to carefully review their motor insurance renewal.

Richard Mason, director of insurance at moneysupermarket.com, said: "Many new car buyers received 12 months free cover last year, which was a great perk. But one year on, you're likely to find yourself paying a hugely inflated premium, because the renewal is unlikely to be competitive."

Many insurers will operate at a loss over the first year of an insurance policy, and look to make up the profit on expensive renewals.

The simple truth is that by comparing insurance premiums now, you could save a great deal of money.