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Buying a car - HP or Cash?
6 Answers
I am buying a new car. I can afford to pay cash. The salesman has offered me HP at an interest rate 2% BELOW the rate I am earning in the Building society on my savings. Should I keep my money on deposit and take out HP or still buy the car cash?
Answers
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I think it would be better to pay cash and try and negotiate a discount in the process, as long as you ensure you have enough funds left on deposit for emergencies. If you subsequently don't like the car or want to change or sell it, having it on an HP deal is an additional complication.
I run a car replacement savings fund, and every month set aside a certain amount so that whenever the current car needs replacing, (and that's not too ofen as I keep my vehicles for years) I have the money available for it. (And on past occasions, paying cash has always got me a better deal).
I run a car replacement savings fund, and every month set aside a certain amount so that whenever the current car needs replacing, (and that's not too ofen as I keep my vehicles for years) I have the money available for it. (And on past occasions, paying cash has always got me a better deal).
It may be better to put it on credit for the following reasons:
1) If something was to go wrong with the vehicle, the lender is jointly liable with the dealer - and if the dealer has gone out of business (eg Rover), you can claim from the HP company.
2) You will probably be able to get a better deal by putting it on finance. Car dealers will often get a commission for selling on finance - and there may be bonuses for a certain number. I actually know car dealers who make more on selling a car on finance than will make on the car
This is based on the assumption that it is a Hire Purchase agreement (not a loan) and the amount of credit is under �25,000
Since the interest rate is also so low, it preserves your cash flow for other possibilities.
It is also really not that much extra hassle to sell the vehicle if it is on HP.
1) If something was to go wrong with the vehicle, the lender is jointly liable with the dealer - and if the dealer has gone out of business (eg Rover), you can claim from the HP company.
2) You will probably be able to get a better deal by putting it on finance. Car dealers will often get a commission for selling on finance - and there may be bonuses for a certain number. I actually know car dealers who make more on selling a car on finance than will make on the car
This is based on the assumption that it is a Hire Purchase agreement (not a loan) and the amount of credit is under �25,000
Since the interest rate is also so low, it preserves your cash flow for other possibilities.
It is also really not that much extra hassle to sell the vehicle if it is on HP.
try options , the dealers dont like doing this
but in the long term you pay x �s for 2/3 years
then purchase car or trade in. I have been
doing this for the last 15 years. the good thing is
ure getting a new car plus cover plus breakdown
plus servicing and paying the same amount every
month which will not change.
but in the long term you pay x �s for 2/3 years
then purchase car or trade in. I have been
doing this for the last 15 years. the good thing is
ure getting a new car plus cover plus breakdown
plus servicing and paying the same amount every
month which will not change.
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