Best Way to Pay for a Car: Cash vs Finance vs Subscription

So what is happening in the UK car finance market these days? There are many ways to pay for a new vehicle, which is excellent news for consumers. But which method is the best way to pay for your car: cash, finance or subscription? 🤔 They all have their pros and cons, so we’re here to help you by answering the burning questions about the best way to pay for your motor. Read on and see which payment type is the most suitable when it comes to buying your next vehicle. 

Pros and cons of buying a car cash


  • Only one payment required
  • Possible access to better deals
  • Don’t need a credit check
  • No monthly payments
  • No interest

Paying for your car with cash is one of the most straightforward and easiest ways to buy a vehicle. It involves just a one-off payment, and you own the vehicle outright. Cash payments also usually give access to the best deals, as dealerships and private sellers see cash payments as more favourable.  

You’re not limited to the type of car you buy either, as there is no lender involved to set borrowing requirements. It means you don’t need to worry about things like a credit check or getting refused for finance. 

There’s also no need for monthly payments, meaning you don’t have any financial commitments as the car is paid for in one lump sum. On top of that, there’s no interest to pay. Essentially, that means you could end up paying less for the vehicle.


  • Depreciate quickly – can lose up to 60% of their value
  • You’ll have fewer savings
  • Lose potential investment opportunity with your savings
  • Limited to your savings

While a cash payment is more straightforward, it’s not always the best choice. A car depreciates really quickly, which means it’s bound to lose some of its value as soon as you drive the vehicle away. They often lose between 50% and 60% of their value within the first three years. 

Using all of your hard-earned savings to buy a car could leave you without a nest egg for rainy days and without any spare cash saved. You could also potentially lose out on any investment opportunities, as the money will go towards funding the car. 

Another factor to consider is the price of the car. You’re limited to the amount of your savings. If, however, you use finance, you could potentially afford a more expensive make and model thanks to the initial payment being lower. 

Pros and cons of car finance


  • More choice with finance
  • Fixed monthly payments
  • More security
  • Boost your credit score

Using car finance to purchase your new vehicle affords flexibility. Again, finance products often allow people to buy cars they otherwise wouldn’t be able to afford as the initial payment is lower. This means you get to choose from a larger pool of vehicles. Did someone say BMW

Saving up to buy a vehicle with cash can take a long time, which usually means car finance is the more viable option. You can agree on a finance package with the lender, and you’ll know the exact amount you'll need to pay each month. 

There’s also more security involved when buying a car with finance. If, for example, you decide to buy a second-hand car with cash, you’re entirely responsible for the vehicle and should conduct your own HPI reports to ensure there’s nothing wrong with the car. Buying a car with finance can also help improve your credit score if you’re making regular monthly payments without missing any. 

If you use Carmoola to finance your car then you’ll also get more transparency. Our simple and flexible payments mean you can spread the cost, and you can adapt the amount you pay each month depending on your financial situation. As a result, you have more financial freedom and better control over your car payments. 


  • Interest payments
  • Possible mileage clauses and additional charges for damages
  • Missed payments can hinder credit score
  • Don’t own the car outright

Using finance typically means paying interest, so the true cost would be more than if you bought the car outright. There may also be clauses like millage fees and additional charges for damages when you borrow from some lenders. Failing to keep up with payments could also negatively impact your credit score

Of course, you also don’t own the car outright if you buy it with finance. And, in some cases, you’ll need to make a final balloon payment to own 100% of the vehicle. PCP, for example, requires a balloon payment at the end of the loan term. 

Pros and cons of getting a car subscription


  • All-inclusive package
  • Contract flexibility
  • Lower deposit

Car subscriptions usually give you complete peace of mind. Most plans involve an all-inclusive package with maintenance, service, roadside assistance and car insurance. Subscriptions can also last for anything between six and 24 months, offering lots of flexibility. 

They can be handy if you’re struggling to find a deposit for a car or face a high insurance cost because of your age or location. That’s because deposits on subscription cars usually equate to one month’s payment of the car.


  • A lower deposit can also mean higher monthly payments
  • Millage cap
  • You don’t own the car
  • Unable to make car modfications

Of course, the downside to not paying a high deposit is more expensive monthly fees, especially when you go for a higher-end model. If you start exploring premium cars, expect to pay incredibly high subscription fees that will likely burn a hole in your wallet. 

There’s usually a millage cap for subscriptions, too, and you’re bound by what the car company sets in its terms and conditions. You don’t own the car, either. That means you can’t make any modifications, and you're essentially only paying for the use of the car. 

Making big decisions 

There’s no right or wrong answer when it comes to deciding how to pay for your car – each option has its benefits and disadvantages. However, with more than 85% of cars bought with finance, it’s easy to see which is the most popular option for car buyers. And if you decide to go down the car finance route, check out the latest offers from Carmoola and find flexible options for your next vehicle! 👍