Can I buy a car on finance and then pay it off?

A reader has been offered a better deal buying on finance than with cash, so can he buy on finance and then immediately pay it off?...

08 July 2019
Jaguar F-Type Coupé

I'm looking to buy a Jaguar F-Type. I've been given a cash price and a finance price, and the finance price is £6000 less than the cash price. Am I legally allowed to take out the finance package and then pay it off straight away? Also, please can you tell me why there is such as big difference in the prices?

John Newby

What Car? says…

If you’re buying on hire purchase (HP) finance, you’re allowed to make early payments to repay the loan. If the finance is a personal contract purchase (PCP) deal, you’re also allowed to settle the loan early, but the terms and conditions for doing so vary from one finance company to another, so it’s important that you read the small print of the finance agreement before signing up for it to ensure any early settlement fees don’t eradicate the savings from taking out finance. 

Even if you do have the cash to buy a car outright, it's actually beneficial to get it on finance or pay for at least £100 of it on a credit card; doing so gives you protection under Section 75 of the Consumer Credit Act, which covers all transactions from £100 to £30,000. 

Buying on HP or PCP gives you added protection if the car develops a fault too, because the finance provider is jointly liable along with the car maker to fix the problem and refund payments where appropriate.

Although you’d expect buying a new car with cash to be cheaper than getting it on finance, because you don’t have to pay interest on a cash purchase, doing so means you miss out on the incentives that are frequently offered with finance deals. 

Many new car PCP deals are offered with a manufacturer ‘deposit contribution’ of at least £1000 and a lower interest rate than other forms of finance. In fact, at present, around 18% of new car PCP deals have a 0% interest rate. Dealers are also likely to offer bigger discounts on cars bought using their finance, because they and the car company get greater profits from this. It also gives them more opportunity to keep in contact with you for servicing and to offer you a new car in the future. 


Best coupés and the ones to avoid

Coupés are all about image and style; they're designed to look great and get heads turning as you drive by. Not long ago, such cars were often very expensive to buy and run, but more and more affordable coupés have come onto the market in recent years.

Coupés can also be practical and efficient to run, but the main focus is always on appearance. Here, we give our recommendations on the best coupés to buy right now and the ones to avoid at all costs.


10. Jaguar F-Type

Jaguar F-Type Coupe

There's no doubt that the F-Type is a stunner, and if you pick one with the peppy 3.0-litre V6 engine, it'll be highly entertaining. It's not the best coupé to drive, though, and neither the manual nor automatic gearboxes are as slick as those of rivals. 

2018 Bentley Continental GT – pricing, specs and release date

The Continental GT conjures up rose-tinted images of what driving used to be like, when the roads were empty and the super-rich would blast across Europe to get to their second home on the Riviera. And yet this car was actually the first truly modern Bentley.

With a 6.0-litre W12 engine that drives all four wheels through an eight-speed automatic gearbox, the Continental GT is massively and effortlessly fast. Unfortunately, it's also hugely expensive to buy and run. 

Read our full Bentley Continental GT review, see our latest deals or see our leasing offers


8. BMW 4 Series Coupé 

BMW 4 Series Coupe

Few coupés can match the all-round abilities of BMW's 4 Series. This is a car that looks great, is perfectly practical and has room for four inside. It may feature many of the same interior fixtures and fittings as the smaller 3 Series, but that's hardly a bad thing, and you also get the option of BMW's excellent iDrive infotainment and navigation set-up.

Read our full BMW 4 Series Coupé review, see our latest deals or see our leasing offers

Next: more of our favourite coupés >

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