Buying a used car with cash or on finance

addis123 · 11 May 2018 at 10:33PM

Hi

Just wondering what people's preferences are when buying a car. Pay for the car cash price straight off (if affordable) or get it on finance. Our old car has packed up so we are looking for a new one. We've got about £8000 to play with. All my previous cars have been bought for around £2000 max, so I've obviously just bought them cash and this was are idea this time. We've been to a few dealers and they all seem to want to point us towards various offers regarding financing the cars we are looking at. Personally I've always thought I'd prefer to buy the car outright then it's mine and I'm not tied down to a dealer, but I'm coming to the thinking that if I'm paying so much for the car (I know some people pay way more than £8000 but it's the most I will have paid) perhaps it's better on finance, what with the warranty that dealers offer with finance deals. Most people I know finance their cats so would like to get some input from the folk on here.

Cheers

addis123 · 11 May 2018 at 10:36PM

CARS...most people I know finance their CARS...
Most people I know don't have cats...

Jonesya · 12 May 2018 at 8:24AM

Why do you think the dealers are pointing you towards finance?

Its because they get commission on selling finance and you make more money for them if you buy it on finance, than if you pay cash.

It may also give them more opportunity to sell you something more expensive, if your limit is £8k in cash, financing with a £4k deposit and add finance, get you upto £10-12k or more. Result! for them - finance commission and their commission on the car goes up as well.

I doubt they are concerned about your best interests.

Schoolworker · 12 May 2018 at 8:41AM

Last month we bought a new car for hubbie as he needed, we went to a well known garage a bought it at a cash price no problems and I believe that we got a bit better deal as it was a cash price. We used mostly our savings as well as some on a 0% credit card we runs out the end of next year so I'm plugging away paying this off rather than their finance package.

I would go for cash buy out if you can and see a car you want in your price bracket but the garage should not give you hasle as they are still getting business. We got a get buy as the car was pre registered to the garage and price was good as they wanted to sell it quickly. Good luck

GunJack · 12 May 2018 at 8:47AM

addis123 wrote: »

Hi

All my previous cars have been bought for around £2000 max, so I've obviously just bought them cash and this was are idea this time.

Why change your previously-successful modus operandii and blow £8k on a metal box that gets you around from a to b to c etc., stick with your £2k budget (which is 5-7 times my budget, btw) and keep yourself motoring for many, many years to come...

....and you'd be a lot more gutted if some idiot writes off your £8k car than a sub-£2k one

check out:-

https://forums.moneysavingexpert.com/showthread.php?t=3803929&page=70

addis123 · 12 May 2018 at 9:04AM

@Joneswa. I think you misunderstood my question. Maybe I didn't phrase it correct. I know exactly why they want me to finance my car and that they couldn't care less about my interests. I just wanted to know what the preferred method of payment was for some of the posters on here.

@GunJack
I can't see a lot wrong with what you're saying there!!

Svein_Forkbeard · 12 May 2018 at 9:21AM

OP the only question is how much interest can you receive on the cash in the bank versus how much interest will you pay on the finance.

The only other caveat is how much you want to keep as an emergency fund. Do the maths and then decide.

If I was in your shoes I might decide to up the car a bit and spend £4k-£6k and keep the car a bit longer.

Alternatively you may decide that you (eg don't have kids yet and) want to go mad for a couple of years and have a nice car, then keep the money in the bank and take out a lease (not a PCP unless the maths favours that) but look for the deal and not the car.

System · 12 May 2018 at 11:31AM

addis123 wrote: »

@Joneswa. I think you misunderstood my question. Maybe I didn't phrase it correct. I know exactly why they want me to finance my car and that they couldn't care less about my interests. I just wanted to know what the preferred method of payment was for some of the posters on here.

£100 on credit card for some lovely juicy Section 75 protection, rest by debit card/bank transfer.

Another option if you had a card with 0% on purchases or balance transfers is to utilise that to pay for it, put the £8k you would have spent in an account gaining interest. Set up direct debits on the card to repay in full by the end of the 0% offer and then you get an interest free loan and actually put yourself in a better place than paying cash as the £8k would have gained a few years interest.

In short, if you can get higher interest on the £8k than you would pay on borrowing then put it on borrowing and invest the £8k. If you can't get higher interest on the £8k than borrowing then pay in cash but in either case put a small amount of the purchase on a credit card for Section 75 protection.

addis123 · 12 May 2018 at 1:19PM

Cheers for that.

Deastons · 12 May 2018 at 2:07PM

addis123 wrote: »

Maybe I didn't phrase it correct.

Somewhat ironic.

addis123 · 12 May 2018 at 3:40PM

Deastons wrote: »

Somewhat ironic.

Not really ironic no. More of that as English is my second language (maybe even third) Amharic being my native tongue, sometimes writing English I'm concerned that I didn't come across as intended. Hence why I thought I may not have phrased my question correctly (please advise that adding the ly to the end of correct is the right term to use)
Always willing to improve my English Deastons so will try harder in the future.

Buying a used car with cash or on finance

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