New car buyers can get better deal through finance schemes than cash

Some of Britain’s most popular new cars are cheaper to buy on finance than with cash, according to a study.

The latest research from What Car? analysed more than 6,000 offers and found that around one-in-seven new vehicles are cheaper to purchase through finance arrangements than by paying with cash.

The list of bargains includes Britain’s best-selling car, the Ford Fiesta where savings of more than £500 are possible.

Meanwhile, other popular models that are cheaper to purchase via a Personal Contract Purchase (PCP) include the Skoda Superb and Volvo S60, and the luxurious BMW 7 Series M760Li is more than £10,000 cheaper when buying with finance rather than cash.

Pat Hoy, head of What Car?’s Target Price mystery shopping team, said: “Buying on finance works out cheaper when the car maker’s deposit contribution is greater than the maximum discount offered for a cash purchase and the finance interest rate is either zero or low enough not to cancel out that saving.”

There are two main reasons why some cars are cheaper on finance.

It’s a good way for carmakers to discount a new model without making it obvious that they’re working to boost sales.

Car manufacturers also prefer to get customers using PCP deals because they can look forward to repeat business when finance agreements come to an end.

Steve Huntingford, editor of What Car?, said: “Before buying, consumers should work out the total amount payable for a car, both as a cash deal and on finance, and compare the two to ensure they pay the lowest price.”

What Car? analysed the best finance offers across key vehicle segments in the UK, highlighting the savings available across the entire length of the PCP contract.

Savings take into account interest payments and the final balloon payment, plus the dealer deposit discounts.

Target Price is unique to What Car? and set using intelligence gathered by a team of mystery shoppers, who negotiate daily to find the best new car deals available across the UK.

The published deals are then guaranteed – and often beaten – by retailers.

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