Should I Buy a New Mercedes on Finance or With Cash?
When considering whether to buy a new Mercedes car on finance or with cash there really is no definitive right or wrong answer because the needs and resources of most buyers are different. We have put together a few basic facts to help you make an informed decision about the various Mercedes-Benz Financial Options that are available.
Pros & Cons of Paying by Cash
For simplicity let’s say you are thinking of buying a new Mercedes-Benz with a list price of £30,000 and your old car is worth £12,000 as a trade-in. This will leave you with a balance of £18,000 to either settle with cash or to cover with one of the Mercedes-Benz finance options.
The big question then is what’s the best option? Well firstly whichever way you do it there will be the cars depreciation to take into account and this will vary depending upon many factors including how many miles you drive per year and the cars condition. One advantage with cash is that you know exactly how much the car will have cost and there are no further monthly or option to buy payments to make as you already own the car outright. This must however be weighed against what borrowing fees are associated with the finance and what else you could do with that cash. For example, if you had a zero or very low interest rate for finance and then invested the cash could you be better off!
Financial Benefits & Incentives
Many motor retailers offer a range of benefits and incentives when you take up their finance options and which may not be on offer if you pay cash. These could include deposit contributions, free insurance, roadside assistance or servicing offers and must all be taken into account when comparing cash with finance deals. If however, you can settle the finance early it may be worth signing up for finance to get the incentives and then quickly paying it off to reduce the cost!
Mercedes-Benz Finance Products
Mercedes-Benz offer a range of Finance products which are designed to offer agility and bespoke options that can be tailored to suit individual needs. The main advantage of these products is that if your circumstances change it is often easier to opt out, extent or change the agreement, or even the vehicle itself for a different type. The various finance options available to both private and business motorists include:
PCP Agility Agreement
An Agility agreement or Personal Contract Plan (PCP) is a flexible method of financing a vehicle over a fixed term. The agreement allows you to defer your decision of whether to purchase, hand back or part-exchange your vehicle till the end of the contract. At the start you decide how much you would like to put down as a deposit and also choose the term as well as your annual mileage. You will be advised of the Guaranteed Future Value of your chosen Mercedes-Benz so that you know exactly how much you will need to pay to own the vehicle outright, known as the Optional Purchase Payment. The Guaranteed Future Value helps guard against the risk of unexpected depreciation and enables you to benefit from lower monthly payments as you are only financing part of the vehicles cost by simply paying your agreed monthly payment. The obvious downside to this is that if at the end of the agreement you decide to hand back the vehicle you are left with nothing, but you have benefited by driving a newer Mercedes for a lower monthly cost than you otherwise may have afforded.
This is the simple way to buy a new Mercedes-Benz if you want to work your way towards full ownership by spreading the cost over a fixed term. Simply decide the amount of deposit on your chosen vehicle and agree the term, then pay the instalments over the agreed term until the finance is repaid.
Personal Operating Lease
A solution for individuals or companies who want to drive a new Mercedes-Benz over a fixed term, with low monthly rental cost and without the worries or commitment of ownership. At the start of the agreement you pay an advance rental upfront and subsequent monthly payments are based on the difference between the initial cost of the vehicle and its projected value at the end of the agreement. Therefore, only a proportion of the vehicle’s value is repaid, which keeps monthly payments lower.
Personal Contract Hire
Enjoy driving a new Mercedes-Benz without taking on full ownership! With this option you lease your car for a fixed period and for a fixed monthly rental charge which also includes the cost of your Road Fund Licence. At the start of your agreement you pay an advance rental upfront and monthly rental are based on the difference between the initial value of the vehicle and the projected value at the end of your agreement. Therefore, only a proportion of the vehicle’s value is repaid, which keeps monthly payments lower.
With a Personal Contract Hire agreement, you can choose from 'No Maintenance', ‘Service Only’, ‘Full Maintenance’ or ‘Full Maintenance with Tyres’ meaning the motoring costs are fixed over the term of the agreement allowing for easier budgeting.
Cash Verses Finance Summary
As you can see there is no definitive answer to this question because it really does depend upon so many variable factors, not least of all whether you actually want to own the vehicle or not! If you would like to further discuss the options of financing or buying your new Mercedes-Benz simply Contact Us here at Sinclair Mercedes and our knowledgeable sales team will be very pleased to offer advice.