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The AA says people should shop around before deciding on a car loan.

The AA reckons that one in three people who buy a car do so by taking a loan, but as interest rates on loans have gone up slightly over the car that may be the reason for the 16% drop in car purchases this year.

But new cars sales have gone up surprisingly making up one third of purchases this year as opposed to just over a quarter last year. Maybe people are worried about reliability and servicing costs for older cars. Running a car is not just about the purchase cost - depreciation is a mjor factor especially on new models, so the savings on a new car may be misleading.

The insurer eSure reckons that finding a loan online could lead to a cheaper deal, which ties in with other sources who suggest that loans sourced online could be at least 10% cheaper ( assuming an interest rate of 10% or less).

The rates on the AA's own loans are usually competitive, but currently their typical APR is 6.8% when cheaper deals at 6.6% and 6.5% are available for the best applicants with super-clean credit records.

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