Buying a Car with Cash

Buying a car with cash is the simplest way to buy a car. You pay the full amount up front, then own the car outright from day one.

Generally speaking, this is the most cost-effective way to purchase a car; you don’t pay any interest charges compared to financing a car using other methods like HP and PCP.

Pros of Buying a Car with Cash

• You own the car outright
• You can sell the car at any time
• Doesn’t matter how good or bad your credit score is
• You don’t need to apply for finance and there will be no record of it on your credit report
• No monthly loan repayments to pay back the car
• You won’t be in a situation where the amount you owe the finance company is potentially more than what the car is worth

Cons of Buying a Car with Cash

• No special offers; car dealerships usually incentivise finance options with a deposit contribution, include optional extras or offer inclusive servicing
• You might need to save up; few people have enough to purchase a new car outright
• Once you’ve paid for the car, any equity within the vehicle is only accessible if you sell it

With around 90% of new car purchases being made using some form of finance, most car dealership offers are targeted towards this route.

When buying a used car from a private seller, paying in cash/bank transfer is generally the only option available. A personal loan can also be used to supplement any money saved if you don’t have the full amount needed to purchase the car.

Finance options offered by dealerships on used cars are generally not as good as those offered on new cars, so this is when buying a car with cash is usually much more cost-effective.