While leasing has become increasingly popular as of late, buying a car for cash is still an option for many, and with good reason.
We understand that leasing isn’t for everyone, and sometimes a cash purchase is the best option for your situation. Or, maybe it’s just what you want to do.
So, is it best to buy a car for cash? And do you get the same discounts when you buy with cash?
OSV also sell cars for cash, and we get these questions a lot. So we’re going to talk you through the cash purchase option, and whether you can get any discounts.
What is a Cash Purchase?
Firstly, what actually is a cash purchase?
A cash purchase is essentially where you buy your car outright. There are no monthly payments or finance agreements, you literally just buy the car as you would buy a sandwich. But more expensive.
A cash purchase is for those who have the cash in their bank, or a pre-agreed credit line with their existing bank. Be aware though, that if you are thinking of getting a loan from a bank, then using this to buy a car for cash might not be the best option. The best thing to do would be to do your homework before you make a decision.
Cash Purchase Vs. Finance Agreement
So, what’s the difference between a cash purchase and a finance agreement?
As I mentioned before, a cash purchase is exactly that. You buy it outright.
With a finance agreement, you make a series of monthly payments for a set period of time. Once that time is up you own the car.
There are two different types of finance agreements that offer you the option to own your car at the end and those are;
- Hire purchase involves you paying fixed monthly payments for between 1 and 5 years. Once that time is up and the final amount has been paid, the vehicle is yours.
- Personal contract purchase is slightly different. You still make monthly payments for a set period of time, but at the end of that period you have three options;
- The car can be purchased for a pre-agreed value
- The car can be handed back to the finance house
- You can part exchange the car
What are the Pros and Cons of Cash Purchase?
As with anything, cash purchase isn’t for everyone. There are advantages and disadvantages to cash purchase. Some of these are subjective, and while something might be an advantage for one person, it may be a disadvantage for another.
Some of the advantages to a cash purchase are;
- You own the vehicle outright
- As soon as you pay, the car is yours
- You’re not tied to monthly repayments
- Insurance tends to be cheaper
- Because you are the registered keeper and the owner of the car, the insurance may be cheaper
- This is because you have a financial interest in the car, and therefore it is assumed that you will take better care of it.
- The car becomes an investment
- When it comes to you selling the car, the money is yours to keep
Of course there are disadvantages to cash purchases and those are;
- You have to dispose of the vehicle
- When you lease a car or go for a personal contract purchase, you do have the option to hand the car back
- If you buy it, however, you are responsible for getting rid of it
- You own a depreciating asset
- This is probably the biggest disadvantage
- A car depreciates from the minute you drive it, so when it comes to reselling you probably will lose money. With a cash purchase, you don’t have the same protection in terms of how much you lose, as you do with a personal contract purchase.
- It’s expensive
- Cars are expensive and unless you have that surplus cash, a cash purchase probably isn’t for you
- You have to pay for the road tax
- If you lease a car, the road tax is included in the agreement.
Can I Buy a Car With Cash Through a Vehicle Broker?
Okay, so you’ve weighed up the pros and cons and you’ve decided you definitely want to buy a car through a cash purchase. Can you buy a car through a broker?
Yes, you can. If you go through a broker that has access to loads of different makes and models, they will be able to search nationwide for your perfect car.
This isn’t the case with all brokers though, so if you do want to do a cash purchase then it’s best you do your research before choosing a vehicle supplier to go through. You can read our article about what to look for in a vehicle broker here.
Can I Get Any Deals If I Buy a Car With Cash?
Of course, you can. Just because you are buying with cash doesn’t mean that you don’t have access to the great deals on offer.
You won’t have access to the same deals as leasing, obviously, because you won’t be making monthly payments. But there will be some brokers that will be able to access trade prices for cars. Alternatively, they will be able to use their strong relationships with manufacturers to get a large discount on the retail price.
If you go through a dealership, you may not be able to access the same deals as a broker. However, that’s not to say that dealerships won’t be able to get you a great deal. You will have access to the retail discounts and ultimately, they have targets to meet and will want to sell you the car in their showroom, so there is always room for negotiation.
Dealership vs. Broker vs. Online: Which is Better for Buying with Cash?
In all honesty, it’s pretty hard to say. It depends on your situation and what you want as a customer.
If you go through a dealership then you are essentially buying whatever car they have on site or on order. This means that if you are limited in terms of specification and colour. However, you can drive away with your car quickly.
If you go through a broker, however, you will have to wait a little longer. But, you have more chance of getting your perfect car. This is because brokers can locate your perfect car from anywhere in the UK and have it delivered to your door.
As long as you do your research, and check who you are ordering from, getting a car online can be super easy. For example, you don’t have to deal with salespeople nor do you have to spend hours walking around a showroom, you can do it all from the comfort of your own home. But it is important that you do your research to make sure you know exactly who you are buying from.
So, yes you can buy a car with cash through a cash purchase. There are multiple ways you can do this and each one has their advantages and disadvantages, the main thing is that you choose which one is best for you.
Andrew has been in the motor trade for over 20 years. What he enjoys most about his job is the team spirit and the dedication of his work colleagues. He also appreciates the teams input in the improvement of the company.
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