For many people their car is their lifeline but with the cost of seemingly everything going up at the minute, drivers are looking to keep car costs as low as possible. Used cars will usually always cost less than their brand-new rival but even second-hand cars can set you back a fair amount! So, what is the cheapest way to buy a car in the UK? We compare cash payments with finance deals to see which would suit you.
Buying a car with cash.
We’ll not beat around the bush here, the cheapest and most cost-effective way to get a car is by paying with cash. This is because you don’t need to pay any interest on monthly payments and the price you see is the price you get. Buying with cash also gives you the freedom to buy your car from a dealer or a private seller. It can be easier to negotiate with private sellers for a used car as they can set the price and dealers don’t have as much wiggle room. This means you could get an even better deal on the car you want to buy with cash. However, when you buy privately, you don’t have as much protection as you do when you buy from a dealer and if something goes wrong with the car, you won’t be able to return it to the seller or get any money back. We only recommend buying a used car from a private seller if you have experience in this area and feel fully confident to do so.
Spread the cost with car finance.
There are a number of car finance UK deals to choose from and you may be better suited to one over the others. It can be hard to save up for a car to pay it off in one lump sum and if you can’t afford to do so, you could consider car finance to help you purchase the car.
A personal loan is one of the most straightforward ways to buy a car on finance. Personal loans aren’t secured against the vehicle which means the lender doesn’t own the car throughout the agreement and you can become the legal owner from the off. If you’re accepted for a personal loan, the amount you’ve requested gets deposited straight into your bank account and you can buy a car just like a cash buyer. Personal loans can be cost effective for borrowers with good credit as they can usually offer the lowest interest rates to customers. A lower interest rate makes car finance cheaper as you don’t pay as much back to the lender in interest.
Hire purchase is another form of finance which is pretty straightforward. Unlike a personal loan though it is a form of secured loan which means the lender owns the car through the agreement. If you wish to buy a car, you can do so through hire purchase and make the final option to purchase fee to take ownership of the vehicle. If you have a low credit score, you may face higher interest rates when compared to people with better credit and it may not be as cost effective in the long run. Hire purchase allows you to spread the cost of your chosen car into equally monthly payments, with interest, until the end of an agreed term.
Whilst car finance can come with 0% interest to pay, most deals do require you to pay some sort of interest on top of your loan. Buying a car with cash can be the cheapest way to get a car but finance can also be a good choice for drivers who are struggling to save up or don’t want to empty their emergency fund on a car.