Cutting the cost of new car finance

29 August 2012

New car registrations come into force on 1 September 2012, and one of the most popular ways to finance new cars is via a personal loan. Nationwide Building Society figures show 37 per cent of customers take out a loan for this reason1.

The most popular car on the market is the Ford Fiesta*, which costs around £10,000.

Many people will take a personal loan from their current account provider to buy their car, but for some this could be a costly mistake. Nationwide research shows current account customers of some of the big banks could be spending nearly £1,100 more than Nationwide customers when buying a Ford Fiesta.

Cost of £10,000 loan over 5 years

  Representative APR Monthly Repayment Total Repayment
Nationwide 6.3% £193.91 £11,634.60
RBS 7.9% £201.00 £12,060.00
Halifax 8.8% £205.20 £12,312.00
Lloyds TSB 8.9% £205.65 £12,339.00
Barclays Bank 9.9% £212.13 £12,727.80
Difference between Nationwide and Barclays Bank £1,093.20

Nationwide charges 6.3% APR Representative to FlexAccount customers using the account as their main current account2. The rate is applicable for loans of up to five years between £7,500 and £14,9993 and can be taken out through a branch, over the telephone or via the internet.

Those who do not have a Nationwide current account can either open a Nationwide current account in a branch and make it their main account in order to qualify for a 6.3% APR Representative rate today or take advantage of a competitive rate of 6.8% APR Representative. This offer is available if customers apply via an online comparison website, such as, for loans between £7,500 and £14,999, for a term of up to five years.

Paul Wootton, Nationwide's head of personal loans, commented: "People will often put the time and effort into shopping around to find a new car, but when it comes to securing the finance they opt for the first deal they are offered.

"Buying a new car can be expensive, but taking the time to research your finance options could save nearly £1,100.

"While some car dealerships offer interest-free hire purchase, in many cases it's part of a special promotion on selected models and often requires a high deposit.

"The Nationwide personal loan offers one of the lowest rates in the market and is worth considering to finance that new car."

Notes to editors:

*According to the Society of Motor Manufacturers and Traders.

1 Figure correct as at May 2012.

2To qualify as a main current account holder you must have a Visa debit card (not cash card+), and:

  • Have been paying in £750+ (excluding internal transfers) a month for the last three months; or
  • Complete an account transfer to us (from a non-Nationwide account) using our Account Transfer Service.

To maintain being a main current account customer you must pay in £750+ each month.

3 For loans outside of this range, personalised rates apply.

Nationwide Personal Loan

  • The interest rate offered will depend on the amount borrowed and a customer's individual circumstances.
  • One fixed rate for the term of the loan - repayments never change.
  • No upfront charges or arrangement fees.
  • No repayments for the first month.
  • All loans are subject to status and are available to those aged 18 or over only.
  • Applications are required for all products. Further details of terms and conditions are available on request.

If you accept your quote, we will leave a record of our check on your credit file that other lenders can see. This is a normal part of many credit application processes but it might affect your ability to obtain credit elsewhere for a short period of time.

Nationwide Building Society subscribes to the Lending Code.

Customers should consider all borrowing options carefully and seek independent advice.

About Nationwide Building Society

Nationwide is the world's largest building society as well as the second largest savings provider and a top-three provider of mortgages in the UK. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 15 million customers.

Customers can manage their finances in branch, on the telephone, internet and post. The Society has around 15,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.

Please note: If you are a customer looking for information on our products and services, please visit the main website.