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Financing a car vs paying cash

Nothing’s worse than an itch you can’t scratch, and when it comes to the world of automotive nothing is worse than finding a car you really like and not knowing how you’ll fund it. 

Do you opt for a bank loan? Enter into a PCP deal? Perhaps you’re lucky enough to have the cash to outright buy it. You could be forgiven for thinking that the hard work is done once you’ve settled on a make and model but the work is far from over.

Here’s a few questions to consider prior to choosing whether financing a car vs paying cash is right for you.

Do you want to own the car?

This question might settle the dilemma for you straight away. If the car you want is your dream car, or you value ownership over usership, or know for a fact you’re not going to want to swap the car at any point during the term of your contract, then you’re more than likely want to pay for it upfront.

Not only does that mean you won’t necessarily need to pay a deposit or discuss monthly repayment but it will give you peace of mind that you own the car outright meaning no prolonged repayment schedule. 

It also means the car is yours to do with as you please, so if you want to stick a towbar on the back or fit a novelty horn then you can make any modifications to it immediately. That extends to any wear and tear too, it’s your responsibility to fix it and you can’t be penalised if you don’t.

Pros and cons of paying cash:


  • No contracts
  • No mileage restrictions
  • You own it immediately


  • Prohibitive cost to most
  • Lack of discounts and incentives
  • Unattainable to buy a new car

Do you want the newest model?

If you’re the opposite of the above, namely you’re not looking to drive your dream car, you just need something to get from A to B, or like the idea of having the latest make and model on your drive every couple of years, then financing a car is likely your best bet.

What’s more, you might actually be getting the better end of the deal. Research carried out by What Car? In 2020 found that 14% of new cars were cheaper when bought with PCP deals. This is because dealerships will often make large deposit contributions and offer low interest rates, so when it comes to making that final balloon payment at the end of your term you are likely to have paid less than if you bought it outright. Something to bear in mind if you’re adamant you want to buy outright too…

If you want the newest models and know for a fact you don’t  want to own the car at all, then PCH or leasing is what you’ll want to opt for. Leasing is essentially a long term rental whereby your monthly payments are based off the depreciation of the vehicle. This tends to be the lowest form of car finance as there’s no interest rates or balloon payment.

Pros and cons of car finance:


  • Can improve your credit score
  • Affordable monthly repayments
  • 0% APR regularly offered on PCP deals


  • Deposit required
  • Car is owned by finance company
  • Mileage limitations

What makes the most financial sense?

While we can offer you advice to inform and educate yourself, only you know whether financing a car vs paying cash is right for you.

While finance offers a certain amount of flexibility whichever form it comes in, it does involve entering into financial agreements for prolonged periods of time which can impact your credit rating. Cash on the other hand is immediate and when buying used will more often work out cheaper than having to take out a bank loan to fund your purchase.

Whichever you choose, ensure you have consulted your finances and can afford the deal as well as all the associated running costs of having a car such as tax, insurance, fuel and maintenance.

If you want to go down the finance route, you can get a decision in minutes with us. Even better, it has zero impact on your credit score.

Representative Example of Credit

We expect more than 51% of our customers to achieve this rate.

Loan Amount Total Cost of Credit Representative APR 60 Monthly Payments Deposit Amount Loan Term Total Amount Payable
£7,500 £3831 19.1% APR £188.85 £0 60 Months £11,331

All offers are subject to change at any time, you must be 18 or over and finance is subject to status, vehicle availability and terms and conditions apply. We can introduce you to a limited number of finance companies, a commission may be received. Failure to maintain payments may result in termination of your agreement and the vehicle being returned, this could affect your credit rating and make it more difficult to obtain credit in the future. All prices correct at time of publication.

We purchase a wide variety of vehicles from all over the country to ensure the best quality and value for our customers, all of our cars go through a thorough inspection process and if they do not meet our standards we do not sell them. We endeavour to inform our customers (where possible) the provenance of the vehicle they are buying and as such we will always inform you if the vehicle has previously been either an ex fleet or hire car. Should your vehicle be an ex hire/fleet car please do not be concerned as we would never value this vehicle differently when you come to part exchange it and there is no difference to the CAP valuation either.

You should try and estimate the distance you will travel as accurately as possible to try and avoid excess mileage charges at the end of your contract.

All pictures and/or photos and car descriptions on this site are for illustration and reference purposes only and are not necessarily the vehicle on offer. All offers are subject to change at any time and are subject to finance approval and vehicle availability. All prices correct at time of publication. E & OE.

Hippo Vehicle Solutions t/a Hippo Motor Finance is authorised and regulated by the Financial Conduct Authority. FRN 658076. We are a Credit Broker not a Lender and can introduce you to a limited number of lenders. Subject to status and to UK residents only (excl. the Channel Islands). Individuals must be 18 or over. Guarantees and indemnities may be required. We typically receive a fixed commission calculated by reference to the vehicle model, product or amount you borrow, for introducing you to a lender but this does not affect the interest charged on the agreement, all of which are set by the lender. Images for illustrative purposes only. Hippo Vehicle Solutions t/a Hippo Motor Finance is an Appointed Representative of AutoProtect (MBI) Limited for insurance distribution purposes. AutoProtect (MBI) Limited is authorised and regulated by the Financial Conduct Authority. Its firm reference number is 312143. You can check this at

We endeavour to ensure that all information including the specifications and finance availability are accurate. Whilst we make every effort to display correct information we are aware that errors may occur occasionally. We are not able, therefore, to guarantee the accuracy of all information especially when given to us by third parties. If you do require clarification of some information you have seen on our website, please email us at . This does not affect your statutory rights.

We are a broker not a lender and our registered office is Unit 26 Trident Park, Trident Way, Blackburn, BB13NU.