Cars that are cheaper to buy on finance than with cash

“Buying on finance works out cheaper when the car maker’s deposit contribution is greater than the maximum discount offered for a cash purchase – as indicated by our Target Price saving – and the finance interest rate is either zero or low enough not to cancel out that saving,” explains Pat Hoy, head of our Target Price mystery shopping team. I remember my father walking into our local Ford showroom in the 1980s with a briefcase full of cash and leaving as the proud owner of a new, metallic bronze 3.0-litre Capri.

Cars that are cheaper to buy on finance than with cash

Cash has historically been the best way to get a good deal on a new car, but our research reveals you can now save up to £10,247 by buying on finance.


p>Finance is cheaper than cash Car buying has changed a lot since then, though. Thanks to manufacturer-backed incentives, such as dealer deposit contributions and zero per cent finance, it can be cheaper than buying with cash – even when you take into account the final ‘balloon’ payment at the end of a PCP deal. “Consumers should work out the total amount payable for a car, both as a cash deal and on finance, and compare the two before buying to ensure they pay the lowest price.” And in some cases there’s an even more compelling reason to choose this type of finance. To help with your new car research, we’ve looked at all the incentives currently offered on new cars by manufacturers, to pinpoint the models for which finance is the best option. Second, car makers like to get people to buy using one of their PCP deals because they can look forward to repeat business when finance agreements end. “There are two reasons why some cars are cheaper on finance. Total finance cost £14,819 Personal contract purchase (PCP) finance has become the most popular way to get into a new car, with 75% of new cars bought using it last year.

Ford Fiesta cornering front three quarters Model 1.1 75 Trend 3dr Buying on a PCP deal lets you buy a more expensive car than traditional forms of finance, such as hire purchase, because it offers lower monthly payments. Only cars that have scored at least three stars in What Car?’s rigorous road tests are included in our round-up. All savings are based on a four-year PCP deal with a 15% deposit and a limit of 10,000 miles per year. Cash Target Price £15,341 List price £16,135 If you do opt to buy on finance, it’s worth checking the small print to make sure you can pay it off early without incurring penalties that could outweigh your saving.

Although 83% of nearly 6000 cars scrutinised by our Target Price experts were cheaper to buy using cash, 14% of them cost less if you took out a finance package instead. First, it’s a good way for car makers to offer a discount without making it blatantly obvious that they’re working to boost sales of a given model.