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Motorists looking to buy a new car ought to secure the necessary funds before they head to a dealership, a new report has warned, or else face unnecessary repercussions.

Following the introduction of the new 2007 registration plate, it is expected that more than 400,000 cars will be sold next month, with the Society of Motor Manufacturers and Traders anticipating that over 187,000 of these will be bought with showroom finance.

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This could result in British drivers wasting more than £228 million collectively, according to uswitch.com's study, as the average dealer's loan has a considerably higher interest rate than that charged by most lenders.

Director of financial services Nick White explained: "A rushed decision or just taking the finance deal offered by the car dealer could turn out to be a long-term financial burden.

"The average interest rate for a car showroom finance deal is 10.12 per cent [annual percentage rate (APR)], which is 4.22 per cent APR higher than the best loan rates available and nearly double the current Bank of England base rate."

He therefore advised motorists to shop around for a loan beforehand, easing the pressure on them when they visit the showroom and offering them savings of £1,220 on average in interest.

Drivers could potentially cut their costs even further by not visiting a showroom at all, with a report last year by moneysupermarket.com claiming that buying a car online can deliver savings of up to £3,000 on some models.

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