Buying a Car Vs Financing: How to Make the Right Choice

Tuesday 4th of June 2024 11:10 BST

4.5 minute read

Learn the difference between buying a car vs financing one. Trust Direct Cars for used cars & vehicle financing options including HP & PCP finance.

Buying a Car Vs Financing - Direct Cars

When it comes to acquiring a new vehicle, one of the most significant decisions you’ll face is buying a car vs financing one. Both options come with their own set of advantages and considerations, tailored to different lifestyles and financial situations.

Here at Direct Cars, our extensive range of used cars and finance options means there is plenty to choose from; with something available to meet every taste and requirement. Our financing and buying options both have their unique benefits, but it’s important to distinguish which option is best for your own needs.

What is PCP Car Finance?

Financing a car with a PCP is akin to renting it for a set period, usually over 3 to 4 years. You make monthly payments to use the car, but you don’t own it at the end of the finance term. Instead, you have the option to 1. Hand the car back to the finance company, 2. Part exchange the car or 3. Make the final payment and keep the car.

Financing Options

Advantage of PCP Car Finance

Lower Monthly Payments

Since you're only paying for the car's depreciation during the finance term, monthly payments are typically lower compared to hire purchase or a personal loan.

Latest Models

Financing allows you to drive a new car every few years, complete with the latest technology and safety features.

Warranty Coverage

Financed vehicles are typically under the manufacturer’s warranty for the duration of the finance period, covering many repairs. However, this only applies to new vehicles. Additionally, a warranty will not cover maintenance costs such as yearly services or new tires, even if the vehicle is under the manufacturer’s warranty.

Our used cars are sold with the balance of the manufacturer’s warranty, if still applicable. Extended warranties are also available.

No Resale Hassle

At the end of the finance period, you have the option to simply return the car to the finance company without the stress of selling or trading it in. You do however have the option to part exchange the vehicle if the value exceeds the final payment (GMFV) or make the final payment and keep the car.

Considerations When Financing a Car using PCP

Mileage Limits

With a PCP finance agreement you can set you own annual mileage limits, usually between 8,000 to 20,000 miles. If you were to exceed the annual mileage limit and hand the car back to the finance company, there would be a charge of between 8p and 14p per mile.

Wear and Tear

You may be charged for excessive wear and tear when returning the car, which can add unexpected costs. However, this only applies if the damage is significant, such as major dents, missing parts, broken glass, or ripped interior.

Understanding Buying with Hire Purchase or Cash

Buying a car means you own it outright once you’ve paid off the hire purchase/personal loan or bought it with cash. Ownership provides more flexibility and long-term financial benefits, depending on how long you keep the vehicle.

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Advantages of Buying Using Hire Purchase or Cash


Once the car is paid off, it’s yours. You can keep it for as long as you like, which can be more cost-effective over time.

No Mileage Limits

Drive as much as you want without worrying about penalties for exceeding mileage limits.


Owning the car allows you to customise it to your liking, from performance upgrades to aesthetic modifications (not if funded using hire purchase).

Resale Value

As an asset, you can sell or trade in the car whenever you decide to, potentially recouping some of your investment if you paid cash. If the car was purchased on hire purchase (HP), any equity can be used as a deposit for your next car.

Considerations When Buying

Higher Monthly Payments

Monthly payments are generally higher when using hire purchase to finance the car compared to PCP, as you’re paying off the entire value of the car.


Cars depreciate quickly, losing value, especially in the first few years. This affects resale value.

Maintenance Costs

After the warranty expires, you are responsible for all maintenance and repair costs.

Making the Right Choice for You

Your decision to finance or buy should be based on your personal circumstances and preferences. Here are some key factors to consider:

Financial Situation

Evaluate your budget for monthly payments, potential down payments, and long-term financial goals.

Driving Habits

If you drive a lot, buying might be more advantageous due to mileage limits on finance agreements.

Desire for New Cars

If you enjoy driving the latest models and don’t mind always having a car payment, PCP financing might be appealing.

Long-term Plans

Consider how long you plan to keep the car. Buying can be more cost-effective if you keep the vehicle for many years.

Trust Direct Cars for Car Financing and Buying

At Direct Cars, we understand that finding the right vehicle is just the beginning. Whether you decide to finance or buy, our dedicated team is here to guide you through every step of the process, ensuring you find the perfect match for your needs and budget.

For more information and guidance, please get in touch with our dedicated team.

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Mark Reilly

Had a walk round seen a car went and got keys went back in put deposit down on car not once was there any salesman breathing down your neck after a sale picked car up a week later had a problem with one ...

Posted 18 hours ago


We have purchased 5 vehicles form Direct Cars over the years and they have all been of high quality and reliable. I bought my fifth car from them recently which as usual was a pleasure.

Plenty of cars ...

Posted 5 days ago

Gail Badger

After having problems with my new car, the staff were wonderful with me. I’ve got to mention one particular sales man called Luke. He had the patience of a saint, listened to me and even managed to laugh w ...

Posted 1 week ago


Excellent service friendly staff Excellent choice of vehicles

Posted 2 weeks ago


Excellent Sales Staff but prices were high compared to other dealers

Posted 2 weeks ago

Glenn Shannon

Cannot fault the service very pleased

Posted 3 weeks ago

Scott Sturrock

Although I travelled from Scotland to collect a car I had not driven, I found Direct Cars very helpful with videos and pictures. Communication was quick and efficient, as was the whole process of purchasing ...

Posted 1 month ago

Kenneth Vernon

No problems at all with the part exchange and purchase of our new car. Tom Breeze very helpful throughout.

Posted 1 month ago

Zoe Keightley

first of all great site where cara are displayed,, lots of room around vehicles to look around ,, no pressure sales like most garages,, sean the salesnab was brilliant,,, also from being seventeen i ...

Posted 1 month ago

Julie Heptinstall

Couldn't fault Luke very professional

Posted 1 month ago

Debra Thew

Excellent service they were there to answer any questions. Very friendly staff.

Posted 1 month ago

Shaun Weldrick

Really enjoyed buying from direct cars…no hard sell, they let an excellent array of used cars do their talking… thanks to Tom for simple and straightforward advice and relaxing easy going selling.

Posted 1 month ago

Christopher James

Daniel was really helpful and we never felt under pressure. He was polite, friendly and did all he could to help. The showroom was very welcoming for children as well with Lego etc which made it an easier ...

Posted 1 month ago


Relaxed atmosphere no pressure. Easy to understand t&c format. Care and attention to detail.

Posted 1 month ago


Impressed with the service,no hard sell ,sorted a couple of minor issues with vehicle .
Tbh i was just about done looking at cars having been worked over by various salesmen (which I have very little ...

Posted 1 month ago


I purchased my new car from yourselves, Shaun was very helpful and the transaction was very smooth. I had to take it for a repair after 2 days due to a slow puncture but the process was really good ...

Posted 2 months ago

Jill Wallace

Genuinely nice staff. Very helpful.

Posted 2 months ago

James Hardy

Very helpful,thorough and efficient.

Posted 2 months ago

Gary Greenhoff

We purchased a car recently and again we were satisfied with the entire buying process.
Shaun the sales person once again was very professional and funny.
Me and my wife have purchased many vehicles ...

Posted 2 months ago

John Wallbanks

Excellent customer service from our first telephone contact through to our final on line purchase.Your sales adviser Mr Ian Whiting is a credit to your organisation and you are lucky to have such a professional ...

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