New car: saving or getting finance?

11 June 2019

New car: saving or getting finance?

New car saving or getting finance

So you’ve found the car of your dreams - but you don’t have quite enough money saved. Or maybe you don’t have anywhere near enough money saved.

When it comes to buying that car, is it better to finance it or save for it? Both options have their pros and cons, so here are some things to consider before you decide what’s best for you.

Applying for car finance

Financing your car gives you the benefit of being able to buy ‘now’ rather than later. It can also mean that you are putting your money into your new car, rather than paying the possibly high costs of maintaining your existing car.

Financing often means you can afford to buy a car of a higher value, giving you the benefit of the most up-to-date technology for fuel efficiency, and often, free servicing for a period of time. Plus, paying off a loan can also be easier (and quicker) than saving for a purchase, with the added certainty of fixed repayments.

If you are considering applying for finance, keep loan affordability top-of-mind. Before signing on the dotted line, it’s important to make sure that you’ll be able to make your loan repayments on time, every time. But remember, if you ever get behind with repayments, our team at AA Finance are here to help – so please don’t hesitate to contact us.

Lastly, putting in a bigger deposit is be a good way to reduce the cost of your car loan. And importantly, by paying more upfront, you will be more likely to offset the impact of depreciation on the value of your vehicle. After all, no-one wants to pay more than the actual value of an asset.

Putting your savings to work

Saving means you aren’t committed to long-term repayments, on a vehicle that is depreciating while you are paying for it. Plus, being a cash buyer means you may be able to negotiate the final price of the car you want to buy. It also gives you more time to shop around, and really think about the type of vehicle that best suits you.

However, it can take time to put aside the amount you need; meanwhile, inflation can have a negative effect on your savings. And the impact of depreciation means that you may need to save for longer, as your money buys you less over time.

If you are some way off your savings goal to buy a new car, what happens if something goes wrong with your current car in the meantime? While saving for your car will save on interest in the long term, it might not make much difference if you are having to pay high repair or servicing costs in the meantime...

If you decide to finance or use a combination of your savings and finance to buy your new car, talk to the team at AA Finance about your car loan needs today. Contact us on 0800 500 555, seven-days week between 9am and 5pm. We’re here to help.

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Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure the content is correct, the information provided is subject to continuous change. Please use your discretion and seek independent guidance before making any decisions based on the information provided in this article.


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