Banks and other direct lenders have not yet reacted to the latest global interest rate cuts and, unless a competitor makes a move, may well hold personal loans at their present value. Indeed, most high street banks have not made a cut in loan rates since early this year despite a succession of base rate reductions.

There are several reasons for this. First personal loan rates are not under the same political pressure as high profile products such as mortgages. Second, with every mortgage rate cut, the banks are losing turnover and they need to recover that ground. Third, and perhaps most important, the medium term predictions are that rates will rise again.

A broad spectrum of City analysts predicts base rates at the end of next year to be 5.25% with one or two marking that up as high as 5.75%. Customers taking out two-or three-year fixed rate personal loans now will be at an advantage and the lenders don't want to be pushed too low.

The outcome is that dealers who are prepared to be flexible can look increasingly competitive, dispelling the myth that the high street is the best place to finance a new car.

However, it is wrong to assume direct lenders will not put up a fight.