Ask Us Anything
I have cash, how will I buy a car?
What is the best option when buying a car. I have cash so don't need a financing arrangement
1. Buy a new car outright with cash and trade it in every year?
2. Buy a second hand car?
3. Put a large deposit down on a car and get into a financing arrangement on a new car?
Lee Russell (Dublin)Mar 2018 Filed under: finance
Expert answer
Hi Lee,
Bearing in mind that I’m not an accountant (not even close and, if you have an accountant, I would direct this question to them too...), it seems to me that, as a car is a depreciating asset, it’s daft to be paying interest to fund that depreciation so let’s park the idea of paying a big deposit and going for finance.
That depreciation is far and away the biggest cost of motoring, so don’t buy new either as nothing depreciates faster than a new car. I think your best bet is to buy nearly new - either one-year-old or ex-demo. That’s the steepest part of the depreciation curve done away with and, if you buy from a brand that offers a lengthy warranty, then the year’s age won’t make much difference to you. Again, though, pass this by your accountant or financial adviser too, eh?
Neil Briscoe - Complete Car Advisor @neilmbriscoe