‘I’m a car expert - buyers are making one crucial mistake and could be paying higher’

Car buyers risk falling into the mistake of a "monthly payment tunnel vision” when choosing their next petrol, diesel or electric car, according to experts at Compare the Market. According to a new study by the comparison site, thousands of drivers prioritise their overall monthly payments instead of the total cost of a finance agreement, even if this means paying more. In a new poll, seen exclusively by The Express, 50% of 2,000 car finance users admitted they focussed more on repayment figures than the total fees.

Almost half (47%) compared monthly payments when choosing finance, compared with 32% who compared APR and 29% who compared the total amount repayable. Speaking to The Express, Charlie Evans, Money Expert at Compare the Market, said: “When you’re working out whether you can afford a new car, it is natural to focus on the amount you will need to find each month. It is an easy figure to understand and to compare against the rest of your household budget.

“But the cheapest-looking monthly payment does not always mean the cheapest deal overall. A lower monthly repayment can sometimes come with a longer agreement, meaning the overall amount paid could be higher. Our research suggests some motorists may be experiencing a degree of ‘monthly payment tunnel vision’. Far more people are comparing the monthly repayment than looking at the APR or the total amount they will eventually pay.

Just 12% said they would prioritise the overall cost of a policy instead of repayment fees, meaning motorists are around four times as likely to prioritise the monthly figure. Meanwhile, the poll found that a whopping one in three (33%) road users said they did not compare more finance options because their monthly payment was already affordable.

However, drivers might come to regret their decision, with 58% believing they definitely or probably could have secured a better deal by comparing more finance options.

Charlie said: “With the cost of living where it is, it is understandable that many motorists focus on the monthly payment. Finding a monthly payment that fits your budget is important, but it’s important for motorists to also look beyond that figure before signing an agreement.

“Looking at the APR, total amount repayable, agreement length and any additional fees alongside the monthly cost can give a much fuller picture of what the finance will actually cost.

“It is also worth comparing different options as there may be a more affordable monthly payment available. Taking a little more time to shop around could help motorists find finance that works for both their monthly budget and their overall finances.”

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