Savings made by not using garage forecourt finance deals could pay for a speedboat like Ellen MacArthur's 3 litre Quicksilver speedboat, says Alliance & Leicester Personal Loans.

One in six (17%) motorists use car dealer finance, and for two thirds (67%) of them it has become a lifetime habit, financing their purchase using car dealer finance every time they buy a car.

With the average car costing just under £12,000, the difference in cost between dealer finance at the average APR of 12.4% and an Alliance & Leicester Personal Loan at 5.9% works out at £1,800 per switch. The average motorist has 11 cars over a lifetime. The lifetime waste of using car dealer finance could be as much as £20,000 in today’s terms, if the full cost of the car is financed each time.

Motorists who use research as their secret weapon and shop around for finance could save themselves over £20,000, which could enable them to drive away with a top of the range prestige car instead of an average saloon or hatchback.

Alternatively, with £20,000 you could:

• Put a large deposit on a house
• Go on a round-the-world cruise
• Invest in a ‘Tiffany’ one carat engagement ring (from £6,525 - £24,700)
• Add value to you home with a new conservatory or extension
• Emulate Ellen MacArthur and buy a 3 litre Quicksilver speedboat

Some of the reasons consumers have got into this bad habit:

• Over half (52%) think dealer finance is the quickest and easiest method
• One in six (17%) believe dealers offer the most competitive deal
• A fifth (21%) believe if they take the finance they will get a discount on the price of their car or some freebies

The average UK motorist buys a new car every four and a half years – or 11 cars over a typical lifetime. Nearly half (46%) generally use savings and a quarter (25%) will use a personal loan to finance the purchase.

Of those who finance their new car through a car dealer’s finance more than a quarter (27%) use this method because they have simply "always done it this way" and it is "just what they are used to now". More worryingly, one in ten (9%) are talked into it by the car salesperson.

Yet the APRs on offer from the typical car dealer finance schemes and those on offer from many loan providers are quite different. If 11 cars at an average price of £11,786 were financed via a typical car showroom deal at 12.4% APR, £38,016 would be paid in interest over a lifetime, against just £17,915 from an Alliance & Leicester Personal Loan at 5.9% APR at today’s prices – a difference of £20,100.

Ash Mukadam, Alliance & Leicester personal loans manager explained: "Motorists must shop around for their car finance or risk paying sports-car prices for an average run-around."

"Preparation is the key to winning the ‘Battle of the Forecourt’. It’s a win-win situation - motorists can use a personal loan to suit their budget before looking around, enabling them to concentrate on getting the best price for a car. If consumers drive a hard bargain and get the car they want cheaper than the loan they have arranged, they can simply reduce the amount they want to borrow."