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The vast majority of car buyers in the UK purchase vehicles on finance. Particularly when it comes to newer and more expensive cars, it’s comparatively rare to buy a vehicle in cash.

Why Car Finance Is Better Than Cash Buying

But let’s assume both options are available to you. Is it better to finance a car, or pay for it outright? Why should I finance a car, if I have the money available to clear the balance in one single payment?

The debate regarding car finance vs buying has been raging for quite some time. Nevertheless, most experts seem to agree that if you want to get the best deal, you should consider car finance than cash buying.

Should You Buy a Car on Finance?

More often than not, paying for something in cash and completing the purchase in a single transaction will afford you the best possible deal. Particularly when it comes to buying things like houses, business properties and so on, buying outright could save you a fortune.

However, research suggests that by entering into a finance deal on car, you could potentially save a lot of money. Or to put it another way, you could actually end up spending more on the car if you buy it in cash.

In years gone by, entering a car showroom with the intention of buying a car in cash would have seen the sales representatives fighting over you. These days, it’s not quite as simple. Contrary to popular belief, the average dealership in the United Kingdom doesn’t earn a great deal of money on each new car sold. In fact, a single new car sale can generate a profit for the dealer of no more than £200.

Instead, a growing proportion of dealerships is focusing more on the money made by car finance. As an incentive, some are offering a minimum of £1,000 in the form of a manufacturer’s deposit contribution. If you go for a personal contract purchase deal over a hire purchase contract, you could be looking at monthly interest rates as low as 2%. In fact, there’s a good chance you’ll be offered a contract with 0% interest for the duration.

All in all, it’s estimated that when all the possible incentives of buying a car on finance are added up, the buyer could save anything from £1,500 to more than £10,000 on a new car. And it’s worth remembering that if you wish to do so, you may be able to repay the loan early at no extra charge.

Long story short – gone are the days when buying a vehicle on finance meant paying over the odds. If anything, the total amount you stand to pay could be considerably less by entering into a car finance deal.

Evaluate All Options

Of course, it’s ultimately up to you to determine which of the available car finance options suits your preferences and your pocket. Just a few popular purchase options for picking up a vehicle include hire purchase agreements, personal contract purchase, personal loans, credit cards and a variety of secured loan options. All of which have the potential to be flexible, accessible and affordable, in accordance with your budget and requirements.

If you’re considering car finance, it’s worth checking out an online car finance calculator for a quick overview of the available options. Using a car finance calculator can be great for establishing your budget, along with your preferred repayment period. If in doubt, contact an independent broker for more information on affordable car finance for all budgets.

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