Buying New Car, Finace vs Outright

ezhiks

I'm in the position to be able to buy a new car. I've only just started looking around and it seems that buying with finance gets a better price than buying outright


Can I use this to my advantage and buy with finance, then within a short time pay it off in full and avoid the finance charges?

EssexExile

Others will be on soon to say "yes" & explain. I bought a new car in January & they paid me £1000 to take their interest free finance, it would've been rude to refuse.

LandyAndy

ezhiks wrote: »

I'm in the position to be able to buy a new car. I've only just started looking around and it seems that buying with finance gets a better price than buying outright


Can I use this to my advantage and buy with finance, then within a short time pay it off in full and avoid the finance charges?

Yes. take the finance and the associated 'deposit contribtions' and then subsequently settle the finance and incur, at worst, a few days interest.

fred990

I picked up my new toy two weeks ago. No amount of dealer contributions, cashback nor finance wizardry came close to the cash price. Other brand dealers claimed it was better to do the finance thing and pay more......:rotfl:
You'll get the old opportunity cost chestnut but unless you're into highly leveraged derivatives and the like (been there!) I doubt you could invest the money in today's market and beat the pcp/interest element? Unless you're Warren Buffet?

motorguy

fred990 wrote: »

I picked up my new toy two weeks ago. No amount of dealer contributions, cashback nor finance wizardry came close to the cash price. Other brand dealers claimed it was better to do the finance thing and pay more......:rotfl:
You'll get the old opportunity cost chestnut but unless you're into highly leveraged derivatives and the like (been there!) I doubt you could invest the money in today's market and beat the pcp/interest element? Unless you're Warren Buffet?

You're muddying the waters with some broad brush assumptions.

On occasions, a dealer will have a car that doesnt qualify for finance incentives from the manufacturer. This can happen if perhaps the dealer has bulk bought a number of a particular car / stock at a heavily discounted price. I've bought a new car like this before, and it was at a fantastic price, but didnt qualify for any other offers.

This may be the situation with the particular car you bought.

However the vast bulk of cars these days come with finance incentives where the manufacturer's finance company put in extra discount IF you take out the finance. There are various reasons they may do this. This is totally beyond the dealers control and the dealer cant just give you this discount instead, as it is not their discount to give.

THUS, for the bulk of new car purchases, it is better to see what finance incentives there are with a view to taking out the finance and settling it almost immediately.

I have done this numerous times in the past and it has been highly effective.

It is wholly wrong to imply that a better deal can always be got for cash as its almost always the inverse thats true.

Granted, the O/P should certainly ask the dealer in question, but 99 times out of 100 the answer will be that the better deal will be got by using the finance and settling it.

motorguy

fred990 wrote: »

I picked up my new toy two weeks ago. No amount of dealer contributions, cashback nor finance wizardry came close to the cash price. Other brand dealers claimed it was better to do the finance thing and pay more......:rotfl:
You'll get the old opportunity cost chestnut but unless you're into highly leveraged derivatives and the like (been there!) I doubt you could invest the money in today's market and beat the pcp/interest element? Unless you're Warren Buffet?

Without any indication or evidence of the car you bought, deal you got or term you wish to keep the car, its almost impossible to compare that to the O/Ps purchasing requirements.

Its an Alfa Guilia from memory isnt it? No wonder the dealer was falling over themselves to get a buyer mind you....

motorguy

ezhiks wrote: »

I'm in the position to be able to buy a new car. I've only just started looking around and it seems that buying with finance gets a better price than buying outright


Can I use this to my advantage and buy with finance, then within a short time pay it off in full and avoid the finance charges?

What type(s) of cars are you looking at?

Its worth checking broker prices as a starter for ten.

Try https://www.broadspeed.com, https://www.carwow.com and https://www.drivethedeal.com

cranford

I used carwow recently to buy a new car. carwow should give you the dealers best price and in my case it showed both cash and finance deals. I tried 3 different makes of car and cash was cheaper.

motorguy

cranford wrote: »

I used carwow recently to buy a new car. carwow should give you the dealers best price and in my case it showed both cash and finance deals. I tried 3 different makes of car and cash was cheaper.

As in "if you buy the car with cash, the price is £28,000 however if you buy the car and use a finance package, the price of the car is £29,000"?

Why would they charge you more for the base price of the car if you were buying the car with finance?

ndf9876

cranford wrote: »

I used carwow recently to buy a new car. carwow should give you the dealers best price and in my case it showed both cash and finance deals. I tried 3 different makes of car and cash was cheaper.

I agree with Motorguy here. The finance "price" sounds like it had interest added on; indeed, on carwow comparisons I have saved, the cash price is higher than the finance price. I also have four different cars saved each with five offers, and in all cases in fact the cash price is higher than the finance price. Perhaps we were looking at wildly different cars

I still feel like, in most cases, taking finance assuming there are dealer contributions, then repaying the finance, is the best bet.

motorguy

cranford wrote: »

I used carwow recently to buy a new car. carwow should give you the dealers best price and in my case it showed both cash and finance deals. I tried 3 different makes of car and cash was cheaper.

I just plugged a Golf GTI in to carwow and any offers coming in include "a £1,500 contribution if you use the VW PCP finance". (ie, its cheaper to use the finance and settle it)

None are splitting out the offers to "heres the base price for cash and heres the base price if you want to finance it".

What cars were you asking them to quote on?