Fourteen per cent of new cars are cheaper to buy on finance

Some new cars are cheaper to buy on finance than paying in cash, according to new research.

Consumer outlet What Car? found that this applies to 14 per cent of new cars based on analysis of its recommended Target Price for each model. It applies to Britain’s best-selling model, the Ford Fiesta, as well as more premium cars such as the Volvo S60 and BMW 7 Series. Buyers could save more than £10,000 on the latter.

Cars from a variety of brands were cheaper on finance, including a saving of £1,500 on the Vauxhall Grandland X, a saving of £1,250 on the Ford Focus, and £1,844 on the Jaguar XF.

Pat Hoy, head of What Car?’s Target Price mystery shopping team, said: “Buying on finance works out cheaper when the car maker’s deposit contribution is greater than the maximum discount offered for a cash purchase – as indicated by our Target Price saving – and the finance interest rate is either zero or low enough not to cancel out that saving.”

What Car? says sometimes manufacturers make finance cheaper because they want to boost sales without making it obvious, as well as encouraging buyers into personal contract purchase deals that encourage repeat business.

Steve Huntingford, editor of What Car?, said: “Before buying, consumers should work out the total amount payable for a car, both as a cash deal and on finance, and compare the two to ensure they pay the lowest price.

“Our New Car Buying platform allows buyers to compare both cash and finance offers on their car, giving them a quick comparison tool to determine which is the best offer for them.”