How to pay

Once you’ve decided the deposit terms, the conditions of sale and if you’re buying through a dealer the trade-in price on your existing car, then it’s time to pay!  When it gets to this point, you need to know how you’re going to pay.

Upfront payment

If you have savings and can pay for your car in full up front, then you can pay by cash, cheque, banker’s draft, on your credit card or even online. If you’re buying privately, however, it’s safer not to pay by cash. In fact a private seller may insist that you pay by banker’s draft as this is a cheque drawn on a bank, rather than on your personal account - so the seller can be sure the funds are available. You can organise a banker’s draft through your bank - you’ll need to complete an application form and pay a fee. A banker’s draft goes through the normal clearing cycle, which takes three working days.

Paying online

If you’re planning to buy your car through the internet, you need to make sure you’re using a secure site. The most common system used by e-commerce sites is Secure Socket Layer (SSL) technology, a standard supported by major Internet browsers. This uses the latest encryption technology to ensure your personal and card details are protected.

An e-commerce site must have a certificate to say they are SSL certified and there are a number of companies that offer this. Verisign is one of the best known of these.

Also make sure you’re happy with the seller, and make sure any third party payment method is through a trusted supplier such as PayPal or WorldPay.

Probably the most common online auction site is eBay, in which case the online payment can be made through Paypal. The advantage is that it’s free for buyers and if you’re selling it’ll speed up payment for your car. But remember, if your buyer pays by credit or debit card PayPal will charge a fee. Other auction sites include Motor Junction and Autorola.

Finance deal

If you’ve opted for a finance deal then you can pay in agreed instalments, which allows you to spread the cost of the car over a number of years, and for a lot of people this is the only way to make such a large purchase affordable. You need to keep in mind that the interest will add quite considerably to the amount you actually pay for the car, but once you’ve paid off the car you own it. There are a number of finance deals available and the section on Cost of ownership tells you more about these.

Leasing the car

Another option is to lease the car. The monthly repayments are cheaper than with a loan and you’ll never owe more than the car is worth because depreciation is taken into account in the leasing costs. However, you don’t own the car and this type of arrangement can only be organised through a leasing company so you can’t buy privately. See Personal leasing in our Cost of ownership section for more information.

Credit card

If your credit limit is sufficient then this offers a further alternative for payment, but unless you have just taken out a new credit card with a nil or low interest rate, then this can be an expensive way to finance your car purchase. Again our Cost of finance section gives you more information.