Used car - cash or financed?

Panavision

I'm looking at buying a used motor. The last time I bought a car was in 2011 at 7k - paid cash then.

Say this used car costs 20k.
I don't like throwing 20k cash on a car when it could be making more money on the stock market, but I also hate the interest payments.

The garage will obviously want to sell me a finance deal. Now, if it's competitive, better than the cash deal, can I settle the finance deal within the first month?
I reckon the settlement figure could be cheaper than the cash price, even with a penalty.

Anyone have experience of this? Pitfalls?

ChuckMountain

It all depends on the deal and the dealer.  Generally with new cars you get a decent finance contribution so it can be often cheaper to buy finance then settle within first month. New cars usually have much lower aprs too.

With used it depends as sometimes you don't get any contribution for finance and the aprs tend to be much higher.  Some dealers will offer a more respectable rate of used finance if you push hard.  So Audi for example normally is 10% plus but they also offer one nearer 7% if you ask.  Both are too high compared to what you get elsewhere but may get you a better deal.

So what type of car etc?

Panavision

Looking at the Honda CRV.

Bl4ckGryph0n

Anything is possible, just got to do your sums since every deal is different. Shop around, look at arranging your own finance, compare that against what you think you'll be making with the money. If you have a mortgage, perhaps taking equity out of there, versus using your other case works out cheaper.

It is impossible for anyone else to fully answer this as only you know all the details.

And don't forget, sometimes it can be cheaper to lease a new car compared to buying a second hand one...Sure you don't own it, but so what if the sums work out better...

johny1980

Yep

Bank loan at 2.9% and buying in cash was by far the better option when I bought my BMW in January.

swiftpete

How much do you make on the stock market each month?

xpressb

I would be careful paying cash just in case something goes wrong with the car, you won't be as well protected (read about section 75 and buying a used car).

outoftheknow

Agreed - pay the minimum required with a card and the rest cash so you are covered by the card protection.