Would you take the credit or pay cash?

[Linedbook]

I'm buying a new car. The dealer's "best" price is £1000 more if I pay cash than it is if I take their credit offer, presumably because they make it up in commission.

I've gone for the highest deposit and the shortest term and total cost of credit is nearly £3500. I don't want the credit, I'd rather pay cash, but £1000 is £1000

It's been suggested that I take the credit and pay it off straight away, but I haven't been able to establish what, if any, of the credit charges will still be due. The dealer is unable to show me the T&Cs until the credit is approved (when I could pull out).

What is the norm?

cash price is £29000 (which is £3k less than the list price). If I take the credit the cost is £28000 (plus the £3500 I'll pay over the term of the loan)

So it's a no brainer that cash is cheaper than letting the credit run its full term (£29000 vs £31500).

But what you need to know from the dealer is:

1. what is the earliest you can pay the credit off without penalty, and
2. how much interest will accrue over that period.

as long as this comes in at less than £1000 then it's cheaper to take the credit.

But in my experience this won't be the case, and the finance companies often have costs that they will say "well we can't tell you that now because we can't predict X months into the future"

For the sake of saving what in reality is likely to be a couple of hundred £ max, I'd save myself the hassle and just pay the cash price.

FWIW OP, I'd be asking the dealer how they can be sure that you'll be able to repay without penalties after 3 months if they can't tell you the terms of the credit agreement

If you ‘apply’ for the loan you will surely be agreeing to those (unknown) terms as part of the application process. They may well give a copy of the terms and conditions after you have applied, but by then you will have agreed them. They really do need to go through them with you before you apply, do not do so is illegal. Unless there is a clearly documented and explicit cooling off period where you can back out, even if there is double check there is not a non-refundable application fee.