I work in the motor trade - whether it's cash or finance is an irrelevance. The dealership will work with the same margin on a used car. Furthermore a dealership can't incentivise one method of payment over another, they could be flaunting FCA rules by doing so.
£500 would be a lot off a £4.5k car, that's pretty much 11% discount. Unlikely to happen IMO unless they're really wanting to get rid of it. Best thing to do is try to avoid speaking about price til nearer the end. Build some rapport with the person you're buying from. It's amazing how many people will immediately go in with "What's the best price I can get this for" and it's the worst way to get a good discount on a car.
Good luck with the car hunting