I am planning on buying a car and I want to pay cash so that I will not have to worry about the payments later. The saleperson yesterday said I was making a bad choice by paying in cash? Was he being honest? or does he have some financial motivation for having potential customers finance cars?
2007-08-18 12:45:52 · 7 answers · asked by Anonymous in Cars & Transportation ➔ Buying & Selling
He has a financial motive.
Dealerships make money on everything to do with a car deal. From the purchase price, to financing, to warranties and GAP. They want you to finance because they get a piece of the interest rate from the bank.
Financial officers (the ones who do the paperwork) hate cash buyers because they make their money exclusively from financing, warranties and GAP. So if you don't buy any of these things they essentially are working for free.
Don't worry about that though. The average finance officer is making $100,000 to $200,000 a year. What he doesn't make on your deal he'll make on another deal.
Salespeople also get a percentage of the "back-end" (warranties and GAP) so they want you to finance too.
The average cash buyer won't buy a warranty either, and they don't need GAP. So the dealership is really losing out on the deal. Which is why they want you to finance.
Financing is only good if you don't have cash. Or if you want to build your credit. Making payments on time (or early) on a car loan is a great way to build your credit up. But don't do it if you don't have too. Trust me, cash is always better if you can do it.
For tips on negotiating for a car check out my website here:
http://www.1-800badcredit.com/car-negotiating-four-square.html
http://www.1-800badcredit.com/car-negotiating-insider-tips.html
I used to sell cars in Phoenix so I know all the word-tricks they use to trick you!
Good luck to you - go get the car you want and don't let them push you around!
2007-08-18 14:02:34 · answer #1 · answered by Anonymous · 1⤊ 0⤋
You shouldn't expect a discount when paying cash for a car. The dealer makes less profit on a cash deal. In fact, if you walk in and say "I want to pay cash for a car", you'll probably pay more for it than if you financed.
2007-08-18 13:07:40 · answer #2 · answered by Scott H 7 · 0⤊ 0⤋
He is just saying that cause when you pay cash he doesn't get any commision out of it. The car dealer wants you to have to make payments that way they get money from the finance company too. I would not tell them I was paying cash up front just try to wheel and deal the price down and then when you get a price you like and start the paper work , then tell them cash, cause once they tell you the price they have to sell it to you for that.
2007-08-18 13:03:34 · answer #3 · answered by roth299 2 · 2⤊ 0⤋
I have suggested in the past, that people with the cash, hold onto it if the financing is at a super low level. If you are offered 0-2% there is absolutely no reason to pay cash. That's really cheap money. You can hold onto your money, or have it work for you. So the sales guy may not be motivated by finance reserve, he could just be trying to steer you in the right direction.
2007-08-18 15:38:48 · answer #4 · answered by jay 7 · 0⤊ 1⤋
I have found that paying cash does not give any special discount. What does make the deal attractive to the dealer is if you do not have a trade-in. Then you will usually get a discount.
2007-08-18 12:55:18 · answer #5 · answered by Joseph F 5 · 0⤊ 0⤋
Dealerships will not discount for cash...it is not beneficial to them....however some of the poorer car lots (stay away) will
welcome a cash deal....
2007-08-18 13:02:02 · answer #6 · answered by RiverRat 5 · 0⤊ 0⤋
I don't know why people think that paying cash is so attractive to dealerships. It's a mystery to me.
Dealerships make money on financing!!!! Doh!
2007-08-18 12:49:02 · answer #7 · answered by terje_treff 6 · 0⤊ 0⤋