/ Motoring

What’s the best way to buy a car?

A lot of parked cars

From cash to contract hire, there’s more than one way to buy a new car. Some methods even give you the chance to have a new car every few years, but which option is right for you?

The UK car market is booming. Sales have grown for 35 consecutive months to 165,000 cars in January 2015, fuelled primarily by pay-monthly finance deals.

In fact, figures from the Finance and Leasing Association show that more than 75% of new car sales were financed through dealerships last year. But the Which? Car Survey told a different story – 75% of respondents paid cash for their current car. So which is the right option?

A new way to buy your car

Rather than traditional hire purchase, where the car is paid for in installments until the buyer owns it outright, most of these new-car sales have come from personal contract purchase (PCP) deals. These offer lower monthly fees, with a large ‘balloon’ payment at the end of a fixed (typically three-year) term to buy the car. However, few people make the final payment – they simply trade the car in for a new one.

Already widespread in the US, leasing, or personal contract hire, has also taken off. Effectively long-term car hire, with no option to own the vehicle, it allows drivers flexibility and fixed costs, as maintenance bills are often included.

According to Rupert Pontin, head of valuations at Glass’s Guide to Car Values, these trends reflect changing attitudes towards car ownership:

‘Consumers, especially the younger, ‘direct-debit generation’ have become accustomed to buying high-priced products and services on a pay-monthly basis […] Owning a car will very likely become a thing of the past for most.’

Consider the total cost

However, while the idea of a new car every few years is undoubtedly appealing, it’s important to consider the total cost. Low monthly payments can disguise a much greater outlay overall.

Using three popular cars as examples, we compared the various methods to buy or own a car to see which was cheapest, including cash, buying with a bank loan, hire purchase from a dealer, PCP and leasing.

Perhaps unsurprisingly, our conclusion was that cash is still king when it comes to buying a car. If you can pay upfront, it’ll work out cheaper in the long run. The same applies if you arrange your own finance via a bank loan.

Don’t ignore leasing, though. If you want a new car every few years (don’t we all?), it’s relatively hassle-free and can cost less than hire purchase or PCP. It all depends on your negotiation skills, so always push for a discount. And bear in mind that even the best new car deals pale in comparison to the savings of buying used.

Which option did you choose to buy your car? If you haven’t already, would you consider leasing as a way to buy a car?


I buy new cars and keep them for a decent length of time, which helps offset the high depreciation of a new car. I owned my last car for ten years.

My preferred option is to pay outright for a car and to shop around, though once I took advantage of and offer of interest-free credit that the manufacturer was offering at the time. When I bought a new car in 2012 the local dealer explained the virtues of personal contract purchase and why it would cost less than making an outright purchase. I walked out because my understanding has always been that the best deals are offered to cash buyers. To cut a long story short, I eventually went back and accepted the PCP deal after being given a better offer, since it was cheaper than what they or other dealers would offer for an outright purchase.

I assume that the benefits of PCP to dealerships is that they can keep most of their customers spending money as people choose to replace their car with a new one rather than keep it. When I took delivery of the new car, I told my dealer to give me a call in ten years and I might be interested in a new car, but to leave me in peace until then.

Happy Shopper says:
23 March 2015

I have bought two cars from new and kept for 12 years and 9 years. Excellent value for money.
Last car I bought 6 months old, 3000km on clock with few thousand off new price. Expect to keep for ten years. Again excellent value.


My current second car is 21 this year and has been pretty reliable from new. It has cost me £3700 over the last 15 years in repairs, servicing, tyres, MoT, battery and so on. 2 breakdowns – a flat battery and a broken alternator belt (the AA don’t carry spares now so a lift home). Admittedly it is used for secondary duties now – my main 11 year old does the rest. I have the view that, if you have a “useful” and basically sound car it is worth spending money on repairs and maintenance rather than depreciation. Perhaps I’m too much a scrooge?


One way i heard to do it is to take out PCP deal if its very good and not being overcharged for new car, agree 5000k miles a year and then just drive normal and get a 2 year loan on low balance left and pay ballon pay off in cash in 3 years and keep for long time. Apparently still cheaper the HP over 5 years. ;<)

Jeff Kidd says:
23 March 2015

I have never bought a new car. I always buy nearly new; less than a year old, and I keep the cars for around 5 years. I paid cash for my latest purchase but before doing so I did look at personal contract hire. I concluded that buying as opposed to hiring was better for me just now because of the mileage I do. On PCH the more miles you do the greater the monthly payment. I would consider PCH when I do less mileage and when I’m driving a smaller car. It would certainly save paying out a large cash sum.

Dakota says:
20 April 2015

I buy a nearly new Mercedes Benz every 3 or 4 years for cash, direct from MB the saving are enormous and it’s just like getting a new car at an enormous discount. They always give me a very good deal.

graeme says:
22 April 2015

Save and pay with cash. Buy at 1 – 2 years old (15k – 30k miles) run to near 200k miles (10 – 12 years) by which time rural life ensures the rust has a good hold! The problem is that DIY car maintainence is becoming more difficult, cannot even get the Haynes manuals anymore.


I regret that the impending demise of one car has made it necessary to buy another. Initially I thought a nearly-new ex demo car would offer the best value. I was wrong. I am buying a new quality car with just the options I consider worthwhile (including a full size spare wheel) at 25% less than list. It will cost not much more than a used version with the benefit of zero miles and a longer warranty.


Congratulations Malcolm and well done finding one with a full-size spare wheel. I’m envious.


wavechange – it doesn’t come with a spare wheel, just 4 runflats. I decided that although these seem very reliable and could get you 50-100 miles in an emergency:
– a disastrous tyre failure would leave you stranded
– a failure a long way from home when tyre outlets are closed would mean an overnight stop
– running on one would make the tyre irrepairable – maybe not doing so would allow a repair (does anyone know?)
– an alloy wheel might get badly damaged on a kerb or in a pothole
So I ordered a complete alloy wheel and tyre from the spares dept – will be strapped in the boot (no provision for a spare of any kind).
I persuaded myself these were reasons enough, plus the bonus is I will use the tyre when the running tyres need replacing.


I cannot fault the reasoning, Malcolm. I’ve heard enough BMW owners bemoaning the lack of a spare wheel. Hopefully you will never need the spare. If you remove them and put a smear of silicone grease where the wheels contact the hubs it will help prevent electrolytic corrosion, which can make alloy wheels very difficult to remove at the roadside.

Did you buy from a dealer or online? It’s a few years until I plan to replace my car but I’m keen to know how safe it is to buy online if you are unlucky enough to have problems during the warranty period.


wavechange, I looked online having been pointed towards people like Broadspeed. In the end I bought through a fairly local dealer at a better price than indicated online – and peace of mind that I sat face-to-face with someone to discuss final details.

It is a time consuming process isn’t it – trying to decide new or used, what car type would suit, what manufacturer and model, then engine, plus what are standard fitments and what options are worth considering, what colour……..Thank goodness it should happen, hopefully, once every 10 years or so. My sons are sensible car owners and helped greatly. They fully approve of the final version. Incidentally on car safety features one son bought his used car with head up display, something he would never have specified thinking it to be a gimmick. He finds he uses it all the time, partly because with an adjustable steering wheel it can partly obscure the instruments. Apart from that he would have it in any car in the future. I followed his advice.


What alarmed me was the variety of extra-cost options the dealer was keen to sell me. The dealer tried to sell me an expensive paint protection system I reminded him that he had just made an offer on my shiny ten year old car that had never had the benefit of such protection. I rather regret taking gap insurance but thought it might be wise since I was buying on a PCP scheme.

On my previous visit to the dealership I said I wanted to pay cash but the salesman insisted that PCP was better value for money. He did some calculations, but would not give me a copy to take away and think about, but did let me take a photo. I then found a pre-registered car of the same make and model at a dealership about 60 miles away. It was a good price and they were happy to take cash. Unfortunately, they left messages and sent an email apologising that another branch of the company had sold ‘my’ car. So it was back to the local dealer and an acknowledgement that the PCP scheme was the best solution. 🙁 Within a year I started receiving suggestions that I should change my car. I said that they were welcome to call back in another nine years and I might be interested. Fortunately they have stopped the calls. I’m convinced that dealers just want you to be looking forward to when you next change your car, like a smartphone on a two year contract. Reliability and running cost are important factors to me and I don’t care if my neighbour has a newer car than me.