Price Negotiating

What is best – to buy a car with cash, finance it, or lease it and why?

shutterstock_275637341When it comes to buying a car, you may not be sure how to go about it. One of the things that may be a problem is how you are going to pay for the car. There are many options available such that it may be hard to know the one that will best suit your needs. If you are in such a situation, you will need to have some insight on all the options available before you make a decision. The following is a list of five options and an insight on the same.

 

Pay cash

Paying cash is the cheapest way to buy in the long run. You will not undergo a lot of paperwork and there will be no monthly repayments. On the downside you have to cover the whole cost immediately. It may mean losing interest and spending savings. Cars are known to depreciate investing in an appreciating asset. Conclusion, it is the simplest and cheapest way to buying a used or new car.

 

Bank loan

It will spread the cost over time. You can look around for the most affordable loan and is usually cheaper than dealer finance. You have the option of pushing for a cash discount in the showroom. On the flip side cost of credit will vary widely. It can be challenging to get a poor credit rating. Lastly, you will bear the brunt of any depreciation as with an outright cash purchase. It is a sensible option for those who do not have the means to purchase a car in one go. Make sure you shop around before making up your mind.

 

Hire purchase

You buy the car using installments and it is easy to arrange with a car dealer. The good thing is you can return the vehicle halfway during the repayment plan. The disadvantage is that it may cost more than a bank loan. Check the terms and conditions to ensure servicing does not cost extra. You will not own the car until payment is completed, and it may be repossessed if you fail to complete payment. A personal loan may save you more than $1,000 compared to hire purchase.

 

PCP

Personal contract purchase is the option where you pay low monthly payments. Basically you will be hiring the car with an option of buying it in future. You can be offered a new car when you even if it is on a yearly basis. Servicing with this option is not likely to be included. There are limitations on mileage with this plan. It is a tempting way to own a new car every year or few years.

 

Leasing

One main advantage of leasing is low monthly repayments. It is simple to change cars without selling or buying. You will not own the car despite how long you lease it. A large upfront deposit is normally a pre-requisite. Sometimes you may have a mileage limit that you will be charged extra when you exceed. Even though it is not the cheapest way to own a car, it may be the most convenient way.

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