The problem today with using a Credit Card is that the banks charge 1.75% to 2.5% 'card handling fee' to any Merchant (business/shop).

Whilst this is accepted for 'trading events' e.g. paying for a service, if a customer is paying £8,000 to £15,000 on a card at a typical rate of 2%, this makes a Card Handling Fee of £160 - £300. This may be damn near the dealer's profit margin on the car.

As for the OP being asked to pay £40 for the privilege of paying cash; at least the dealer has (fairly) made him aware of this charge in advance of the transaction, rather than (unfairly) asking for the £40 on the day.

Which side of the fence am I on? Sorry; but I'm with the dealer (I understand the predicament and constraints on his business operation).

cash should be quite acceptable - still legal tender I believe!!

No-one has said it wasn't legal tender, but large amounts of cash being paid into banks are now subject to various controls, mostly to do with money laundering, plus most business insurance sets very strict limits on the amounts that can be held or transported. My wife's shop is not covered if transporting more than £1k or holding more than £2k. I'm sure a car sales has higher limits, but........................