Cash vs Finance: Which Is Cheaper for a Car?

Financing costs interest, but the cash you keep can earn a return — compare the net cost of both options.

Formula

Net extra cost of financing = Interest cost − Gain on cash kept invested

Assumptions

Standard amortising loan with fixed payments, excluding loan insurance, taxes and incentives: add them for your offer and country. Indicative only — not financial advice.

How to read it

If the expected return on your savings clearly beats the loan rate, financing can make sense; otherwise paying cash avoids interest and credit insurance. Always keep an emergency fund — emptying an account for a car is rarely wise. General information, not personal financial advice.

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