Is having CASH a negotiating tool when buying a used car?

[WeLuvDCL]

In the market for a used car and wondering if we should mention cash or not.
When going to a dealership to purchase a used car (2-3 years old) would I be able to get a better deal if I mention CASH! Or do they really care anymore? I heard that it's actually a bad negotiating tool when buying a new car from a dealership with their own financing. Is that true? And does it apply to used cars also?

 

[disneyfreakk]

In my experience, no.

 

[cvjw]

We always pay cash for our cars and have never gotten a discount for doing so. I'm sure the dealership would much rather you finance your car thru them so you can pay them interest, instead of paying cash.

 

[Mkebound]

Paying in cash is actually a negative when buying from a dealership that wants to make money off of financing you the loan for the car.

However paying cash is an incentive when dealing with a private seller.

If you will be buying from a dealership it's better to tell them you plan to finance, negotiate the purchase prices as low as you can, then when it's time to buy the car and they present you with a financing offer, you ask for 0% or really low financing. When they don't, then just say "Fine, I'll pay cash" (watch their mouth drop) then close the deal at the price you wanted.

 

[Cheshire Figment]

The last time I bought a used car we did all sorts of negotiation and got to where the dealer gave a "best and final" price. They had allowed us to take the car to our mechanic for an independent inspection. Their final price was a little under $12,000.

When we went back, we had in hand a personal check payable to the dealership for $500 less than their best and final price, marked with the VIN and the phrase "full payment".

We won.

 

[MrsPete]

In my experience, paying cash for a car is a negative -- for negotiating, that is. For your budget, it's a great thing. You'd think that they'd be glad that you don't have to qualify for financing, and you'd think that they'd be pleased that you'd be a quick-transaction . . . in reality, though, the dealership hopes to sell you the car AND make interest off you for the next 3-5 years . . . so they're actually disappointed if you pay cash.

My suggestion:
Refuse to discuss anything except "total out the door cost".
If the salesperson asks how much you can afford to pay each month, say, "I only want to talk about total out the door cost".
If he asks whether you're going to finance, say "We can talk about that later. First I want to talk about total out the door cost".
If the boss needs to know, say, "Gee, that's too bad because I only want to talk about total out the door cost".

Once you know their best price on the car, THEN you can reveal how you intend to pay.

They're experienced at this game . . . and since they play it 40 hours + a week, they're almost certainly better at it than you are. So don't let them start throwing this and that number around. Use the internet ahead of time to determine what a certain car is likely to cost, and refuse to discuss anything except that one number.

 

[goofyredraider]

Not all car salespeople are "sharks" and playing a game with you. Believe it or not, there are some honest guys that work hard, answer your calls on their day off, answer emails at night when they should be sleeping, and work 70+ hour weeks (DH is one of those guys - he sells Fords).

Researching via Kelly blue book and online and going into a dealership and saying "I know it is worth xxxx" isn't going to do any good. They know how much $$ they have in the car (in trade in, in repairs they made to resell it) and they don't make a TON on used cars (or new) in this day and age. The days of mega-commissions are long gone...they went down the toliet with the economy and when the gas guzzler promos were going.

How much cash you put down (if financing) really just depends on your credit.
Unless they are doing in-house financing, they could care less how you pay for your car. If you are doing in-house financing, chances are your credit isn't that great and you don't have any negotiating room. Also, if your credit is bad/mediocre, you really can't be picky....be happy you are able to get financed. 99% of the time the finance company tells you what you have to put down in order to get the deal done.

And saying you want "total out the door cost" right away without revealing whether you need to finance isn't going to help - if you need to finance, they have to factor your rate, etc. and that effects your out the door cost. They can't "predetermine" that without credit, money down, and all those variables.

Be honest with your salesperson! 99% of the guys I have been around for the last 14 years are honest hard-working people...if you are honest with them and treat them with respect, they will return that. Know what you want and are willing to do before you walk in, because so much of it is out of the dealership's control - and in the hands of the finance companies.

HTH.

 

[chattyann]

We just bought a 2011 Camry with cash and we were straight up with the salesman at the dealership. We got a very good deal!

 

[TheRustyScupper]

1) DO NOT EVER SAY YOU HAVE CASH !
2) Dealers make MAJOR BUCKS from financing.
3) Let them think they will finance you car.
4) They will sacrifice sales dollars to get you on the "back end".
5) You should
. . . talk about the car in which you are interested
. . . take it for a test drive
. . . give positive sales comments ("nice ride", "good color", etc)
. . . ask salesman what the payments might be
. . . go back to office
. . . bargain on the price
. . . the will think you want to finance
. . . once you agree on price and Sales Mgr signs off, they pay cash
. . . with a signed contract, they cannot back out IF mgr signed
6) Other bargaining hints
. . . go on the last Tuesday of the month (slow sales day)
. . . they have an incentive to "make their sales month"
. . . go about 1-hr before closing
. . . after bargaining, you will be past closing and they want to leave
7) And, NEVER, NEVER, NEVER offer your trade in
. . . they can move the numbers of the trade to make things look good/bad
. . . if you trade, get the value of the trade BEFORE price talks
. . . this commits them to a trade cost
8) The biggest strategy
. . . BE READY TO WALK AWAY IF THE PRICE IS NOT RIGHT

NOTE: I was in the auto biz for over 20-years, and visited a lot of
dealers. DO NOT THINK you can beat them at their game. They go
through sales meetings every day. You buy a car once every 3-10 years.
Do your Internet research as to the factory cost of the car and offer
no more than 2% over that amount. A good bargainer will get the car
for 2% under the cost to the dealer. (The manufacturer hold back 5%,
so there still is a margin.)

NOTE2: Go to EDMUNDS.COM and look for buyer's advice. Some really
good hints. Almost puts you on an even footing with car salesmen.

 

[Shmily1]

Coming from someone who has gotten really good deals on cars and is married into a family with several car salespeople, it is not good to divulge everything up front. Get your best price, then write them a check for a little under that and hand it to them and see if that goes as Cheshire Figment suggested. It worked for me and I drove off with an awesome convertible.

Good luck!!

 

[mrodgers]

I've only purchased 1 car brand new since 1992. I've never had a dealer finance my used car. The financing is always through some bank, thus, the dealer doesn't make anything on the financing.

You have to decide how much you are going to pay for a particular car and be willing to walk away if the dealer doesn't agree.

 

[sullins5]

This disneychik just bought 2 used cars last year and felt like we did excellent! First thing I did?
Research, research and more research. Huge Consumer Reports, KBB fan, Edmunds fan. Knew I wanted one of 4 cars (we wanted a gas saver since I was spending over $100 weekly on my suburban). Shopped on the 30th of the month, went to dealerships all day, knew the total price I was willing to pay. Walked in, looked at cars anywhere from 1k-2k over my price. Last dealership, the dealer showed me one of the cars, 2010, wanted me to take a test drive. He wouldn't tell me the price. I told him I wouldn't drive it until I KNEW the price. He got the manager. Manager comes out, quotes me 20K, and I said "Whoa, I'm sorry. I have a budget, have looked at cars all day, and have 3 way under that that I'm looking at". He said "How much?" I told him what I was willing to 'walk out the door', that I wanted a chip painted over, mats in the car, and anything else I found. The finance manager said "It's a good thing you didn't tell the manager or tell him you had such great credit". When we asked why? He said, they surely wouldn't have come down this much in price, they would've wanted you to finance it! Guess what? Got the car almost 1K under KBB price, and it's wonderful! Mind you, I was kind, firm, and had walked away all day from 'non-negotiators'.

Next car? My 23 dd wanted to pay cash for her car. Found one on the internet, same research. Went out to dealer, found it. Car was $2K over budget. Drove it. Asked if negotiable. Got in the 'negotiators seat' told him, "Nope, too much. She's paying cash and this is all she has". After 2 times with the manager, willing to walk out, my dd got her 2010 car at a GREAT price.
My husband says I can buy or sell anything, I think it's that you treat people with kindness, you stick to YOUR budget, and determine TOTAL what you want to pay, it'll pay off in the end...Besides, it's just a shiny piece of metal!

 

[daughtersrus]

In the market for a used car and wondering if we should mention cash or not.
When going to a dealership to purchase a used car (2-3 years old) would I be able to get a better deal if I mention CASH! Or do they really care anymore? I heard that it's actually a bad negotiating tool when buying a new car from a dealership with their own financing. Is that true? And does it apply to used cars also?

DH works at a Lincoln dealership. There, they item number written on the windshield is actually code for how much money they have into the car. For example, if they item# is 345904, they have $4,095 into the car(they add a few digits on just to make it look good ). That way the salesperson knows right off the bat how much profit they're making. Their commission is based on profit. I'm not sure if that's an industry standard or just at the dealer DH is at. He's been there 27 years (he's not in sales) and it's always been done like this.

At the dealer that DH works at, the finance person is the highest paid employee because they get commission off of the finance as well as the up-sells like warranty, fabric protection...They much prefer that you finance it than pay cash because it's no risk to the dealer. They're paid by the company that finances it.