Is it ever an better idea to buy a car on finance when you have cash?

Andrew_Ryan_89

I bought my first car cash by using simple mathematics. Cost of the car over 5 years on finance vs the cost purchased in cash. Turns out I save around £4-5,000 buying cash.

Once the wedding is out of the way, in going to start saving for a Ford Mustang which will cost around £30,000. I'm not rich so this isn't going to be money I'll easily come across, it's gonna take some time and graft.

Once I have the money saved up, are there any benefits to NOT buying the car outright?

AnotherJoe

Yep, often there are deals if you buy on finance, typically free or cheaper maintenance, maybe additional extras, money off, etc..

So, buy on finance, then pay off in cash a few days later.

redpete

By using the dealer's finance I got £500 towards the deposit and 3 years' free servicing, it also meant I didn't have to sell investments right then (car only available for a limited time) so took the offer and paid the loan off within a couple of months by taking out a cheaper one, then paid off the second loan when it was a better time to sell some investments.

So it made sense to me but generally it's not a great idea to take out anow expensive loan against an asset that is decreasing in value.

dealer_wins

If the only loan you ever take is a mortgage for your house, you've done better than most in life, and saved £1000s upon £1000s more than most!

bengalknights

Generally taking finance with the dealer scores you some extras over cash amongst them a lower price and in some cases even 0% interest

Alexd52

Agree with the 0% interest if available, then you can invest the cash and make a bit of interest

Naf

I've probably been watching too much "Can't pay? We'll Take it Away" - but cars on finance can't repossessed to clear other debts.
Doesn't sound relevant to your circumstances - but your question does ask "ever" :-)

brendon

With those 0% deals, is it not the case that you could get a cheaper deal paying in cash. I remember reading that 0% interest was a false economy, because if you paid in cash you should be negotiating a discount. (I could be wrong... I've never purchased a new car).

Andrew_Ryan_89

I forgot to mention, when I first got my car I had about £4k knocked of the price getting it through finance (though the price was inflated to begin woth) and just paid it of the next week.

Alexd52

brendon wrote: »

With those 0% deals, is it not the case that you could get a cheaper deal paying in cash. I remember reading that 0% interest was a false economy, because if you paid in cash you should be negotiating a discount. (I could be wrong... I've never purchased a new car).

Nowadays dealers tend to have incentives to sell finance with their cars. As a result, there is often more negotiation/incentives for the buyer to purchase a car this way.

maxie014

Ive only ever paid cash for cars,but seems some good deals on loans at the minute 3.5% at mands.
What is the typical apr on garage finance?