📅 Category: Financing & Ownership | By: Clyde Motors KE | ⏱ 5 min read
It is one of the most common questions we receive at Clyde Motors: “Should I save up and buy cash, or is it better to finance?” The answer is not as straightforward as many people assume, and it depends on several factors that are specific to your situation. In this post we lay out both sides honestly so you can make the decision that is right for you.
The Case for Buying Cash
You Pay Less Overall
This is the most compelling argument for cash. When you finance a vehicle, you pay interest on the loan — and over a 48-month loan at 15% per annum, that interest can add up to 25–35% of the original vehicle price. On a KES 2,000,000 car, you could end up paying KES 500,000 to KES 700,000 in interest over the loan term. Buying cash eliminates that cost entirely.
You Own the Vehicle Outright from Day One
A financed vehicle is technically owned by the lender until the final payment is made. If you fall behind on repayments, the lender can repossess the vehicle. When you buy cash, there is no such risk — the car is yours completely from the moment you drive away.
You Have More Negotiating Power
Cash buyers often have a slight negotiating advantage. A dealer who receives immediate payment has no uncertainty around financing approvals or disbursement timelines. At Clyde Motors, we treat every buyer fairly, but in general, cash transactions are simpler and can sometimes result in a better deal.
No Monthly Repayment Obligation
Without a loan, your monthly financial obligations are lower. You only pay for insurance, fuel, servicing and other running costs — no fixed repayment that must be met regardless of your income that month.
The Case for Financing
You Get Into a Better Vehicle Sooner
This is the most important practical argument for financing. If your current savings can buy you a KES 800,000 vehicle but you qualify for financing that puts you in a KES 2,000,000 vehicle, the financed option may serve your needs dramatically better — for work, family, safety and reliability. Sometimes the right vehicle for your life is the one you can access through financing, not cash.
Your Cash Stays Working for You
Money sitting in a savings account earning 7–10% per year is working for you. If you drain your savings completely to buy a car, you lose that financial cushion. For business owners and entrepreneurs especially, preserving cash for working capital — while using affordable financing for a vehicle — can be the smarter overall financial decision.
Inflation Works in Your Favour
Kenya has historically experienced meaningful inflation. The KES 50,000 monthly repayment you begin making today will feel progressively smaller in real terms as time passes and incomes generally rise. In contrast, the full cash price you pay today is at today’s full value.
You Can Buy Now While Prices Are Favourable
Kenya’s used car market fluctuates with currency exchange rates, particularly the USD/KES rate which affects import costs. If you are waiting to save enough cash, prices may have risen by the time you have the full amount. Financing allows you to lock in today’s price.
The Honest Comparison: A Real Example
Let us look at a concrete scenario.
Vehicle price: KES 2,000,000
Cash purchase: You pay KES 2,000,000 today. Total cost: KES 2,000,000.
Financed purchase: 30% deposit (KES 600,000) + 48-month loan at 15% p.a. on KES 1,400,000. Approximate monthly repayment: KES 38,000–42,000. Total paid over 48 months: approximately KES 2,420,000–2,620,000. Additional cost of financing: KES 420,000–620,000.
The cash buyer saves that KES 420,000–620,000. But if the cash buyer had invested those savings and earned returns, or if financing allowed them to access a significantly more capable and reliable vehicle, the calculation shifts.
So Which Should You Choose?
Choose cash if: You have the full amount available without depleting your emergency fund, the vehicle you can afford in cash genuinely meets your needs, and you prefer the simplicity of no monthly obligation.
Choose financing if: The vehicle you need is beyond your current cash savings, you want to preserve your cash for other purposes, or the monthly repayment fits comfortably within your budget without strain.
The worst decision is financing a vehicle where the monthly repayment stretches you uncomfortably. The second worst decision is waiting indefinitely to save cash for a vehicle you need now.
At Clyde Motors we work with both cash buyers and financed buyers every week. Whatever route you choose, we will help you find the right vehicle and the right deal. Come see us on Kiambu Road or reach out and let us help you think it through.
👉 Visit clydemotors.co.ke or WhatsApp us on 0740635621. Financing available on most vehicles in stock.