Buying a car with cash and buying a car through hire-purchase are two options for getting a car, but they have their distinct differences. Understanding these differences can help you make an informed decision for which option is the best for you.

Buying with Cash

When you buy a car with cash, you are paying the whole amount upfront. This means that you will not have to worry about making monthly payments or paying interest on the instalment for your car. Buying a car with cash means that you will own the car outright, and you have more freedom to do whatever with it.

The downsides are it can be difficult to come up with the full amount, especially for expensive cars. Additionally, if you use up your savings to buy a car, you are putting yourself at a financial risk if an emergency arises. Buying a car with cash is usually not advised unless you have a lot of cash to spare, as you can use that cash to generate more money.

Buying through Hire-Purchase

When you buy a car through hire-purchase, you make an initial down payment and make monthly payments to pay off the car loan. The car belongs to the finance company who provides you the car loan, and only becomes yours once the car is fully paid off. Buying a car through a car loan also involves paying the interest on the loan, which is higher the longer your car loan is, and can add up to be a significant amount.

The advantages of buying a car through hire-purchase is that it allows you to obtain a car even if you do not have the full amount of the car ready. You can also spread the cost of the car over a long period of time, which can make it more affordable. If you are financially savvy, you can use the money saved when buying a car through hire-purchase versus buying it with cash to make more money, which can offset the interest and even net you a profit.

Buying Second Hand Cars

If you don’t want to spend so much money on a new car, buying a second hand car is a good option. Since second hand cars are cheaper, it is easier to buy them with cash, especially since hire-purchase loans for new cars are harder as they have an age-limit for the car, and you may only get a loan for a certain percentage of the value of the car.


Buying a car with cash and through hire-purchase each has their pros and cons, and it mainly depends on your personal preferences and financial situation to see which option is better for you. It’s important to carefully consider the long-term costs and benefits of each option before making a decision, and factor in your needs before making a decision.