Fiance or buy a car outright?

jonneymendoza

jonneymendoza

jonneymendoza

Caporegime
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Lorville - Hurston
Hi i was wondering what your take is on buying a car outright if you had the funds or still go for finance?

What are the pros and cons of both?

I see many car dealers insisting on me to finance instead of buying outright and wonder maybe its because they get more commission for that instead of me buying a car outright.

Thoughts?
 
If the interest rates stay low for a while, I think I'd be considering a bank loan and then buying the car out right.

Car Dealerships make money on the finance hence why they push it. Another option maybe to take the finance option (as you may be able to get a better deal) and then ring the finance company and pay it off in full (not sure if that's available on all finance deals though)
 
Well if you finance, you pay interest on it, I assume the salesmen make more commission this way.

I'd always buy outright if I had the money. Why pay interest on something if you don't have to?

swain90 said:
Another option maybe to take the finance option (as you may be able to get a better deal) and then ring the finance company and pay it off in full (not sure if that's available on all finance deals though)
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I know from personal experience that, (at least with ford who finance through Barclays) you can request an early settlement figure but they do put charges on top.
 
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outright everytime If i could.

for me personally its not worth having debt lurking around as you never know whats going to happen in life. Rather be worry free
 
If you can afford to buy it outright, you'll often get the best deal if you agree to finance it (dealer deposit contribution and often a bit of discount), but then pay it off within the 14 day cooling off period where you'll only pay a daily rate of interest.
 
If you have the money then definitely out right but make sure you leave enough in case anything major comes up. If not, I would go bank loan, that's what I did for my last car.
 
jonneymendoza said:
I see many car dealers insisting on me to finance instead of buying outright and wonder maybe its because they get more commission for that instead of me buying a car outright.
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Simply because they're selling the car for more. Car A might be 4999 to buy, but 5999 with finance. They're getting an extra grand for nowt.
 
I'd definitely explore the finance option, even if you have the cash to hand. Dad saved a good few grand on his car by going finance, then paying it off as soon as he was allowed.
 
jonneymendoza said:
hiya.

yes i have backup.

the budget i have for a car wont burst my whole savings i have.
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You can do a combination of both, say pay 75% from savings then 25% from a bank loan with like a 3% interest.

Or put the 25% on a interest free credit card for 12 months and pay that off in your own time.
 
IMO it totally depends on the deal, like mazda was offering not long ago(might still be?) 0% finance on new mazda 3's, IMO That is a great deal.

but if you're not careful you can get very much ripped off.
 
grudas said:
IMO it totally depends on the deal, like mazda was offering not long ago(might still be?) 0% finance on new mazda 3's, IMO That is a great deal.

but if you're not careful you can get very much ripped off.
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Be careful with those - you're paying for it somewhere.

It's easy to see the difference, go and get a quote on CarWow for a brand that has a 0% offer. I did this a while back when Skoda were doing it - the offers coming in for a few grand higher for finance.
 
jonneymendoza said:
What are the pros and cons of both?

I see many car dealers insisting on me to finance instead of buying outright and wonder maybe its because they get more commission for that instead of me buying a car outright.
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Yes, they are going to push for the deal that makes them the most money.

It's up to you to work out what deal is actually best for you.

If you can afford to buy something outright, it's usually best just to do so, rather than pay interest on it, especially at the relatively high rates of interest that car finance often involves.
 
MooMoo444 said:
Simply because they're selling the car for more. Car A might be 4999 to buy, but 5999 with finance. They're getting an extra grand for nowt.
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Where did you get that from? I have never seen a car advertised at a higher price if you take finance.

Generally car dealers like finance becuase they get to sell two products - a car and a finance package. They are paid commission on the finance and the sales staff are KPI's on finance penetration % etc.

So, sometimes you might get a better initial deal by taking the finance, but unless you clear it reasonably fast your deal will soon turn sour because with the exception of some manufacturer backed new car finance deals, the interest rate on car finance is almost always considerably worse than the interest rate on a bank loan.

If you've got a decent credit rating you can borrow from 3.5% APR through some banks at present.
 
Raymond Lin said:
Or put the 25% on a interest free credit card for 12 months and pay that off in your own time.
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Careful with this, most dealers have a low maximum value paid for by credit card with punative fees for any amount above this. The last BMW dealer I purchased from for example had in the terms and conditions that they would accept no more than £2k on a credit card without levying a 3% fee, which pretty much wipes out any saving over a bank loan anyway,
 
[TW]Fox;29305554 said:
Where did you get that from? I have never seen a car advertised at a higher price if you take finance.

Generally car dealers like finance becuase they get to sell two products - a car and a finance package. They are paid commission on the finance and the sales staff are KPI's on finance penetration % etc.

So, sometimes you might get a better initial deal by taking the finance, but unless you clear it reasonably fast your deal will soon turn sour because with the exception of some manufacturer backed new car finance deals, the interest rate on car finance is almost always considerably worse than the interest rate on a bank loan.

If you've got a decent credit rating you can borrow from 3.5% APR through some banks at present.
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I mean with the interest, not the base price of the car. They earn more from the same sale, no?
 
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