What Car? Q&A - Should I buy with cash or by credit?

Q: I am looking at buying a used Mercedes ML 270 or 320. I can afford to pay in cash - should I buy it with the cash or take out credit and keep it in my savings?
Chris Shaw

A: It all depends on how high an interest rate you can get on your savings and how low an interest rate you can get on a loan.

If you can earn more in interest by leaving the cash in the bank than you would pay in interest on a loan, then do so.

The more cash you have, the better the savings interest rate you'll be offered so, ironically, finance is often the most attractive option to those who can buy things outright. That's why Mercedes sells so many £317,610 SLR McLarens on finance.