‘I saved £3K on my car with simple switch drivers don’t know about’ | Personal Finance | Finance
A driver shared how a simple switch has slashed her car costs by £3,000 yet the majority of motorists do not even know you can do it. Charlotte Coles, 32, from Basingstoke, organised a car finance deal when she bought her second hand Kia Nero, facing steep repayments with a 15% interest rate on the amount.
A year later she came across MoneySuperMarket’s car refinancing calculator tool, which allows you to switch from your current deal, even if it’s from a dealership, as Ms Coles’ was. She was able to refinance through the comparison site and get a reduced interest rate of 10%, saving her around £3,000.
She said she uses her car all the time, including for commuting to work, visiting her family in Essex and Gloucester, and ferrying her pug around.
Ms Coles was able to use her substantial savings to go towards a very special holiday. She said: “We put that money towards an unforgettable trip to Australia to see family we had not visited since before Covid.
“Having that extra cash made such a difference – we had an amazing time, fed kangaroos, saw koalas and went to Sydney Opera House…lived it up a bit in a way we couldn’t have without switching the finance on my car.”
Research from MoneySuperMarket suggests people are overpaying their car finance by £1,781 on average, yet more than six in 10 UK drivers didn’t know you can refinance your car mid-contract.
The process involves taking out a new agreement on your car and using the funds to repay an existing agreement. Switching to a new finance deal allows drivers to secure lower monthly payments by reducing their APR or changing their contract length.
Those most likely to benefit includes people who didn’t shop around when they took out their original deal or individuals whose credit score has improved since they first took out their car finance.
Interest rates are expected to continue to fall this year, meaning drivers may be able to get even better deals over the coming months.
Alex Hasty, car finance switching expert at MoneySuperMarket, said: “If you bought your car using finance, like Hire Purchase or Personal Contract Purchase, you might be able to make a saving on your current deal.
“The average amount drivers who switch through MoneySuperMarket save is £1,700 over the course of their finance agreement. That’s £56 a month – about enough for a tank of petrol for a small to medium sized car.”
