Card trick that can save you hundreds on the cost of almost any new car

In 2022 Brits bought 818,509 new cars, and the vast majority could have saved themselves hundreds of pounds on the cost with a relatively simple trick

Share this guide
Same car, less money

The cheapest way to buy a new car isn’t with cash, it turns out. Using your savings or cash to buy a car in fact could cost you hundreds more than using the right sort of finance.

The problem is working out what the “right” sort of finance is.

Understandably, given 2022’s best selling car - the Nissan Qashqai - costs more than the average take home pay in the UK¹, the vast majority of new cars bought by members of the public are bought on finance.

The most recent figures show in November 2022 more than four new cars in five (81%) were bought with point of sale finance.

The cost of dealer finance

The problem is that dealer finance is very rarely the cheapest way to borrow money.

At the time of writing, cheap personal loans are charging less than 5%, while a look at the dealer finance cost of the top 20 car brands in the UK³ shows standard rates that almost never match that.

Given the average amount advanced in November for a new car was £25,792.85, that’s an awful lot of money to be charged over the odds interest on.

How you save hundreds

The good news is that, while you might not be able to cover that cost with a personal loan, 0% credit card or savings, you can certainly bring it down.

Looking at the Qashqai again, adding £5,000 to your deposit saves you £470 in interest payments on a 3-year PCP deal.

And the even better news is that if you got £5,000 added to your bank account from a 0% money-transfer credit card it would only cost you a 4% fee - costing you £200 - with no more interest due on that money for the duration of the 0% period.

That’s a saving of £270 over the term of the PCP deal.

And if you think you’d be even better off using savings, you’d be wrong.

Currently, the top-paying one-year savings bond will get you 4.33% interest, that’s £16 more than you’d pay in fees on a money-transfer card.

Find the best credit card for you, whether you're looking for 0% card for balance transfers or purchases or day to day spending and rewards

When cards save you nothing

There is, however, one exception.

At the time of writing Ford, Renault and Volvo are all offering 0% car finance deals⁴ on parts of their range.

While Volvo needs you to fund 50% of the purchase price before you qualify for its 0% finance, and you’ll need to have a good credit score to qualify for any of them, if you can get them, there’s no cheaper way to finance your new car.


¹ Median household earnings in 2022 were £32,300 according to the ONS, the best-selling car in 2022 was the Nissan Qashqai according to the SMMT, with a hybrid version costing from £33,525 at the time of writing.

² Figures from the FLA for November 2022, compared with SMMT new car sale figures for the same month.

³. Finance rates displayed from manufacturers’ retail websites on January 26, 2023:

  • Volkswagen - 7.9%

  • Ford - 0% or 1.9% or  4.9%

  • Audi - 9.9%

  • BMW - 6.9%

  • Toyota - 5.9%-9.9%

  • Kia - 7.9%

  • Vauxhall - 6.9%

  • Mercedes - 5.9%

  • Hyundai - 7.3% or 8.6%

  • Nissan - 5.99%

  • Tesla - 6.9%

  • Peugeot - 4.9% or 5.9% or 7.9% or 10.9%

  • MG - 8.9%

  • Skoda - 7.9%

  • MINI - 6.9%

  • Land Rover - 8.9%

  • Volvo - 0% - 50% deposit (9.9% otherwise)

  • Renault - 0% (6.4%)

  • Citroen - 7.9%

  • Dacia - 7.9%

⁴Parkers roundup of 0% car finance deals for January.

About James Andrews

View James Andrews's full biography here or visit the press centre for our latest news.