Direct lenders were anticipating this month's Bank of England 0.25% cut in interest rates (to 5.75%) and moving to capture market share. Rates are on the way down and any dealer who does not follow is in danger of losing business.

For the moment the moves are fairly subtle. M&S Finance has a range of special offers available until early March; Tesco is offering its 'best rate ever'; Barclays Bank will offer discount on standard rates to existing customers. Many of the offers come with strings attached.

For instance, the M&S discounts of 'up-to 5%' only apply to smaller loans of less than £1,000. Move into more average car loan amounts of £5,000 and the discount is 0.4%. At the top end of the range it just about makes M&S competitive with the other big players.

Equally, Tesco's best-ever rate of 8.4% only applies to loans above £15,000 and over five years Ð but it makes a good headline and pushes the lender ahead of the market.

Several companies have pushed up their protection insurance premiums in the past month; in some cases cancelling out any improvements in monthly payments due to lower interest rates. Abbey National has dropped 0.1% of most bands, but then added more money back in with insurance charges.

Nonetheless, Abbey is highly competitive across all the price bands and is the high street lender which most closely matches rates found direct.