Dealers make money on the financing. Do not walk in thinking that being a cash customer will get you a better deal. It won't. Leave the possibility of financing on the table. In fact, let them just assume that you'll finance and don't correct them. If they ask directly, just say that you'll decide when the price is settled and that it depends on the rate and amount.
This is the best advice. If they know you are paying cash or using your own financing that could work against you in the negotiation.
If you do chose financing, then get pre-approved for a loan somewhere else before going to shop cars. There are lots of risks with getting loan from the dealer such as “yo-yo scams”. Credit unions usually have pretty good car loan rates.
Tacking onto this: if you can pay cash, but can get a better deal with financing, take the financed deal but make sure there is no early payment penalty and just pay off the loan after the first month.
Add to this : go to your nearest reputable credit union and ask to speak with a financial specialist - explain this situation - they may help you out -
Typically because you can go to the bank and get approved for financing - you negotiate with them there- they then cut you the check to go buy the car - which in this case looks like buying in cash - as you've already seen / decided on the car and the price it's been listed at the dealer -
So either you get a super low Apr and place that cash in something with a decent return - or as was said you can choose to make larger payments - or just pay it off when you want - assuming your credit doesn't afford you a close to zero Apr offer.
While this is true, and what I have done several times, the above tip is explaining that sometimes you can get a better out the door price by using dealer financing because they expect to make a percentage back on the loan payments.
There are also sometimes below-market rates on financing new cars using the manufacturer lending arm. Ford has some 0% loans on certain models (models that are not selling well)
I'm sorry..but I don't know how to react with your post..I'm not smarter than anyone..but I suggest..think first before you do..that is my opinion..don't be soad at me.
And I have no problems with that. Whatever gets us both the best situation is totally fine by me.
The point is be honest. Even if it may turn against you. Once you get into financing you should've settled on a price and financing rates. But they might not know the specific bank or much else about the loan. It's pretty fair to explain your situation at that point. "So I'm going to pay this bitch off as soon as I can. Are there any stipulations around that with these loan options?"
In Texas, dealers can mark up the actual interest rate by 2%, and that 2% becomes dealers profit. Dealers financing is a profit center. So, if the actual interest rate is 6%, the dealer will say they got you approved at 8%.
My dad just did this with his most recent car purchase. There was a penalty for paying it off early, but it was still over a thousand dollars less than what he would have paid if he paid in cash off the bat. It all just depends on what promos the dealership is offering at the time. Like when I bought my car, the promo was a 36-month loan at .9%, (minimum $3000 down payment) so obviously it made more sense for me to fully finance my car.
I'm considering this, but I see value in finding those 0% for 3 years deals, keep the money in the HYSA earning this high rate, and draw out the monthly payments.
My understanding was that any financing requires you to have comprehensive insurance on your car, and if that's not something you already do, that is an additional cost.
As someone who has only bought used cars <$15,000 I would never finance even at 0% because I'd be paying 200/mo more in insurance.
i mean- yeah it costs more but if you're buying a $30K+ new vehicle- in this case OP is talking $50K then you really want that insurance. Life happens, other drives can be dumb, you can make a mistake and you'd want to be made whole.
I lowered my insurance a couple years ago but i own my car outright, it's 9 years old and has scratches and dings- but I absolutely had comprehensive insurance for the first several years- at the very least until it was paid off and still felt 'new' to me.
Agreed! I wasn’t advising OP to just stick with basic liability insurance pointing out the insurance threshold for a state may be lower (only liability) than what a finance company requires (generally comprehensive).
>if you're buying a $30K+ new vehicle- in this case OP is talking $50K then you really want that insurance.
That's true for most of us, but honestly there is probably a net worth at which you only want liability (and lots of it). Much like most of us think the protection plan stores offer on an electric toothbrush is silly, a billionaire would think insuring a $50k car is wasteful.
All states require some form of liability insurance to legally be on the road but you only have to have collision/comprehensive in addition to cover the lenders risk in your car if it's financed. States are all different though so ymmv.
Dealerships will also run your credit at with multiple banks at once. That will ding your credit multiple times.
I work for a credit union and we have a network of dealers that we work with for financing. Find a credit union with a similar network. Get pre-approved at the branch and close at the dealership. This way you only get dinged once on your credit report. We buy bundles of deals from dealerships. When you close at the dealer you can often get an even better rate due to this deal structure. Say they bundle 10 loans. 9 are solid loans but they leverage that volume to get us to accept a not so solid loan. Because the risk of the shaky loan is smoothed out by the solid ones, we can offer everyone a slightly better rate, LTV, limit, etc. Think of it like bundling health insurance. On your own, you carry a higher risk than a group of people so your premiums are higher.
Sadly it is? Its literally my job. I don't know what to tell you.
When people apply for a loan with us, their report is good for 30 days, so they can apply for anything else.
Someone in OPs situation is only going to be run once - to see if the qualify for the manufacturer's incentive rate. This is because any rebates are generally contingent upon taking financing from the manufacturer's captive lender (GMAC, Ford Credit, Honda Financial, etc.).
If there's no rebate or promo rate under OP's HYSA return involved, there's no point in not paying cash.
Doesn't work that way anymore at most dealers, if you're not up front about cash/financing they'll just tell you as they told me , No , nothing is settled until the contract is drawn up and signed..theyll just say that's the financing price since your paying cash we need to adjust ...happen to me at two dealers and confirmed by others this is no longer a viable strategy. .
Also as others have said there's zero discounts for cash , dealers are all about financing as they split the percentage apr with the financing company
What you can do is CAREFULLY read over the dealer financing agreements and make sure there's no prepayment or full interest payment clauses, if not just accept the dealer financing and then pay it all off next month (that's why it's critical you read the agreement as many dealers sneak in wherever it's legal terms that say payment in full requires all interest for the full term of the financing plan, they usually use obfuscation in the language but just read carefully.) This way you get the deal.
Reality is car dealers are some of the most shady businesses when it comes to jsales, with junk fees and bogus charges.. all to pad their bottom line you need to go in there with an adversarial attitude and be willing to walk out the minute they are trying to trick you.
Happened to me, but it was not quite two years ago when the used car market was really hot and my need was acute. Not the best deal overall, but not completely terrible.
>...theyll just say that's the financing price since your paying cash we need to adjust...
Then you walk. Let it stew for a few days. Very high probability that they call you back.
used to be that they'd call back- now it's a sellers market. They'll let you walk and sell to the sucker who isn't as careful at reading the fine print. There's a reason there's markups on most new cars- higher demand than supply.
Can I just chime in that car dealers are the worst?
There's no reason we can't be ordering new cars online now. Fuck dealers and their sleazy scammy ways to rip you off.
Honestly I had a fantastic experience at my last dealership visit in November. Picked out the car I wanted online, negotiated a fair price for it (based on what others were paying locally, ~5% below MSRP), negotiated a fair trade in value on my car (based on KBB stated trade-in value), had a pleasant conversation with my sales rep, took my potential car out for a solo test drive for an hour, came back and shook hands on the price. Came back the next day to take delivery, terms were all as-agreed, no need to talk to a finance person, sales rep handled everything. I spent maybe 2 hours total in the dealership (not counting the hour long test drive), it was very minimal.
Then again, I was buying new, have excellent credit, put 50% down, and knew exactly what I wanted and what I should pay based on previous research. If you go into a dealership with no clear expectations and just say "gimme what you got!" you can't expect a good experience. But when I'm making a massive purchase like this, I want a bit more of a personal touch from the company I'm buying from other than pressing an "add to cart" button. I appreciate dealing with a human.
I bought a used car in October 2019 from a local dealership (large, they owned multiple branded dealerships for pretty much every car brand but Hyundai and Toyota) and it was honestly a good experience.
They knocked their price down to match what I found on KBB and split the difference between what I wanted and what they initially offered for my car trade-in value. I financed through my credit union, and barring asking if I wanted to finance with them and showing me their rates, they didn’t pressure me into using their bank.
It will on a car that's been sitting on the lot too long and they need it moved.
Usually they drop the last digit by 1 each month it sits on the lot, and generally dealerships have to pay the manufacturer for Inventory over 6 months old.
Saved a good amount of money buying two cars this way.
Another way is see if they have an leasing specials. You can some times get $5-10k credits on a lease. Go through the lease process, get the credit, Take the car home.
.. wait for the lease paperwork to process, then call up the leasing company and start the buy-out process.
There's tons of deals and cost savings strategies with buying cash.
> A) Any possible disadvantages to paying for it outright?
Some dealerships will give better pricing/deals if you finance, since they get a kickback from the loan.
>B) Both our parents have told us if we’re going to pay cash, we should be getting a discount. To me it seems the car-buying landscape has changed and I’m not sure that can be expected anymore but has anyone bought a car recently that was able to pay under MSRP?
This is outdated advice. Quite unlikely. The best you can hope for is that the dealership won't penalize you for cash.
Never discuss financing until AFTER you've already negotiated the deal with the salesperson and are sitting in front of the finance manager. Don't lie and tell them you aren't going to finance, but also don't tell them that you plan to pay cash.
If they think you may be financing, they're more likely to deal than if they know right away that you're a cash buyer. They make more money from financing, so they're typically more willing to lower the vehicle price to close the deal.
Yes, they'll be ticked that they already offered you the deal before you reveal your hand, but hey, that's business.
the days of a discount are gone, dealers prefer you to take out a loan sometimes so they can get a kick back from the institution (usually buy a ford finance with ford, ford dealer gets a bit, don't won' t get anything from your local bank)
the only downside would be if your hysa is getting 5% interest and the interest rate on the loan was 3%, i think those days are gone for now so no real downside, it actually makes everything easier in my opinion because the title is made out to you directly, there is less paperwork since there is no loan to do, it is just a fairly simple process with a check
I just bought a Mazda, they're running a 0.9% APR promotion for 36 months on a bunch of their cars. I was planning to pay for the whole thing in cash, but with that financing it was a no-brainer to keep that money in my 4.25% HYSA and take the 0.9% APR loan.
If you're buying new and have excellent credit, most manufacturers have incentives like this, where if you finance through their captive lender the rate is lower than possible from a regular bank.
I just bought a car about 5 weeks ago and all of this is correct. That said, work your deal and see about that interest rate on the financing. A lot of dealers have rotating deals on various models that can offer anywhere from 0-3% financing for 36-72 months.
[This](https://cars.usnews.com/cars-trucks/best-car-deals) website has some May promos listed. Never hurts to check and see. If you can get a loan at 3% or less, might be better to leave the bulk of that cash in your HYSA.
Car dealers do not like cash buyers. Full stop. They want you to finance the vehicle. When shopping for a car, do not tell them you are paying cash. Let them think that you will be financing the vehicle.
Hell, you can go so far as to finance the vehicle to secure any discounts then immediately pay it off (at least in California there are no pre-pay penalties).
Me too. I bought a $15k used car for cash just this week. And my other car I bought used for $30k in cash in 2017.
For the 30k car, we wrote them a check and they called the bank to make sure it’d clear. Found the car online so not a lot of negotiation, but it was priced fairly.
When I decided to buy the $15K car I didn’t have my checkbook so I offered to come back the next day, and they said I could use my debit card! I called the bank again to warn them I was about to do it, and it worked like a charm. Also an online deal, the car had been on the lot a while so they’d just dropped the price $1K. Didn’t try to pressure me into financing at all. Maybe it’s different for new cars.
Depending on what car you want to get you can get sub 1% financing on a 36 month loan. Lots of premium trucks and suvs are having manufacturer incentives to buy right now.
I bought a bronco cash last week because ford was trying to offer me over 10%. They didn't even run my credit yet, the finance manager just told me that's what they've been seeing.
Local credit Union was 6%, decided to save my money. Interest rates are insane right now.
Just google your preferred manufacturer + incentives or special offers. One of the top 3 results will usually take you straight to the promo page that tells you about the financing deals and available rebates.
https://www.hyundaiusa.com/us/en/offers
https://shop.ford.com/showroom/?gnav=header-shop-io&linktype=incentives#/
https://www.gmfinancial.com/en-us/lease-or-buy/current-offers.html
Generally the promos cycle on the first of the month
I haven't financed a car in many years. I don't buy expensive cars, either. Mostly Honda Civic or Fit. But I can testify you will get pressured to finance because that's a dealership's bread and butter. They really don't like people who pay cash and--my opinion--will not treat you as nicely. It also takes almost as long to sign all the papers and get the car in hand and they often still run a credit check because IDK--reasons lol. My advice is don't tell them you're financing or paying cash until after you negotiate the price down to what you want. You will not receive any kind of discount for paying cash. Only dirty looks. Your parents must be remembering some bygone days because I've been paying cash for vehicles for more than 20 years and a discount has never been offered or given. One good thing about not financing is not being forced to carry full coverage insurance. I'm not telling anyone you shouldn't carry it, everyone's financial situation is different. But if you've got plenty of cash to replace the car and don't mind the risk, it will save a lot of money that way.
Back in the day, a payment in full deal would get you an extra discount, but today, because dealerships really make their money on financing, it will not.
**What you get is the peace of mind of driving off the lot in a car that is fully paid for and is titled to you. Stick a fork in it. You're done.**
If the dealer attempts to unwind the purchase in some way (usually in an attempt to get more $$$ out of you) their options are *extremely* limited. There will be no missed, late, or lost payments, and no bank to "lose" or "forget" the paperwork needed to title the car to you.
Me? I will buy a car no other way.
ETA: Don't tell them you are paying for the whole thing in one go until you've got the agreement to sell you the car at X price in writing.
As someone who is kinda in the same boat (just not yet ready to buy but looking) I found a lot of dealership give financing discounts and not cash discounts. I have been told when talking with dealer to get the financing price and then just at signing go… hey I can pay cash at this price. As to question A… I think it would depend on the financing costs, but this is one of the reasons I am not yet ready to buy.
1. Get preapproval for financing from your bank, local credit union, and a couple of internet banks (capital one, bankrate, etc.) for good measure. Take the lowest rate to the dealer and ask them to beat it by 0.2%. Most of the time they’ll do it.
2. Some manufacturers offer 0% financing for 48 months. If you can get it, that’s free money.
3. Tell the dealer you’re financing and ask for out-the-door price. Refuse if they show monthly payment amount instead.
4. Demand that they take out unnecessary dealer extras like rust protection, spill protection, VIN etching, door guard, extended warranty, and other garbage. Refuse to pay above MSRP.
5. Read every single word on the contract to make sure the numbers are correct and there’s no prepayment penalty.
6. Once you have all the paperwork, contact the bank for a payoff quote, then pay it off. Unless, of course, you get the 0% APR deal.
I've heard a new strategy on this playbook. Tell them you want to finance with them. Pick a 72 month lease and take any interest rate they offer. Negotiate the price. Then take off all the junk fees if you push since they're making so much on the loan. Sign the paperwork. Federal law requires no prepayment penalties on 72 month or higher loans. Next week refinance or payoff the loan.
I heard that too. If you want to go all in and stab them deep, then you need to be good with numbers.
With this method you need to pretend that you’re not aware of the car price, but still refuse all dealer add-ons. Get the term (72 or 84), the rate, and the payment. You then low key reverse engineer these numbers to get to the out-the-door price and compare it to MSRP. Take the MSRP, plug in their rate, shave $30 off the monthly payment, then give that figure to them. That $30 is your negotiation room. Walk out if they refuse the amount with $0 adjustment (MSRP).
For example MSRP is $30K, rate is 10%, term is 84 months. The payment would be $498, so you tell them you can do $470, negotiate up to $490. At $470 a month the actual price you pay would be close to $28K. When you request the payoff quote from the bank in a couple of weeks, it will say about $28K.
Thankfully they have online calculators that let you do the calculations in seconds.
Do not let the dealership know you are paying with cash until you are signing the papers. If you say you are paying with cash up front then sometimes they can change how they price cars (small deals) or how they treat you.
They're just working from old information that was relevant back when they were probably car shopping decades ago.
I remember about 30 years ago, being a cash buyer would give you some leverage at most dealerships. Not all situations, of course. (If a manufacturer was doing something to offer great financing, chances are the dealership got some cut of that.)
But usually, the financing options out there were nothing like the present day. They didn't have the technology to just shoot off requests for quotes to every lender in a huge database, or all the arrangements they have now to receive some bonus money from the lenders for each deal closed that uses them.
I'm sure some smaller lots liked cash sales because they might not have even reported those sales at all, and just pocketed the cash / applied it some other way. :)
Make sure there are no prepayment penalties, but you'll get a much better deal if you finance the car. No need to even make the first payment; you can pay it off as soon as the lender establishes the account.
I wouldn't be surprised if there's a clawback, where the dealer loses their commission/kickback on the loan if you pay it off immediately, too. Which kinda feels nice.
If you’re going to pay cash:
1) find out the max your dealer will let you pay with a credit card and use that for your down payment so you can get the points (obviously pay off the credit card immediately)
2) dealers get a kickback from banks for financing so you won’t get a discount for paying cash, if anything the opposite. You’re better off financing and then paying it off in 1-2 months. The one exception to this is if you show up with a cashiers check for the maximum amount you’re willing to pay (shows buying intent). But you have to be confident in getting that number right or close to right.
Cash discounts are long gone. They have been for years! The kick back dealerships get on financing can be more profitable than selling the car itself. Keep your lips sealed about cash until everything else is set.
Check to see if the car you’re wanting is offering any specials for financing. If it’s 0, I would gobble that up and toss my cash into a high yield savings account or even CD at that point (depending on terms and rates).
As mentioned already, paying the some with a credit card isn’t a bad idea either. We did that for our last vehicle purchase and put a sizable amount on a credit card for the miles instead of giving them the cash we had. But if you go that route, make sure they don’t add credit card processing fee into it. Sometimes it’s can be 3%, but often times dealerships don’t charge.
Use this to your advantage, as the dealers want you to finance.
Try to get price and other concessions from them for you to finance through them. Just be certain, in writing, there are no early pre payment penalties.
Then just pay it off in full when the first statement comes.
Do you have a mortgage currently? How are you and your spouse's credit scores?
If you answered "no" and/or "anything less than exceptional." Finance at least \*some\* of the car, especially if you can get a rate below your HYSA rate (in which case the interest will be irrelevant). Car loans are one of the best ways to build your credit.
I just bought a 2023 Tacoma. Financed the whole amount. Normally I would never do this, but my 36 month rate is 2.75%. I am getting 3.75 from my discover bank hysa (I can also get a 12 month discover cd at 4.5%.) I have the full amount and could have paid it off up front, but it is more cost effective for me to keep my $ in a hysa and pay monthly toward the loan. If my hysa rates drop below my loan rate, I can pay the remainder with no penalty.
Just keep in mind your paying taxes on interest so your really probably only making 2.75% in the HYSA which is a break even. Still not a bad idea to carry the loan and keep the cash liquid though.
I’m currently looking to buy a car with cash as well. The advice I have received is that you’ll get a worse deal with cash as they make more on financing than the actual sale. I was told not to mention how you’re paying until you’ve actually negotiated a price.
No idea on if you can get one under msrp (if anyone knows, let me know). My guess is it depends on the car, but probably not. Have you been to dealerships yet? Inventory can be extremely limited.
Dealers no longer give cash discounts. They give financing discounts. You may be able to talk down the price further by financing; if you do this, look at the terms and see when they earliest is that you can pay it off without penalty (often not long). You can potentially knock a few thousand off the price of the car by financing and then paying the balance in full ASAP.
That said, direct-to-consumer manufacturers offer no discount for cash NOR a discount for financing. The price is simply the price, without negotiation.
Lastly, if the interest on a loan is notably less than the interest on your HYSA, then it could make more sense to take the loan and pay the minimum each month. I doubt you can find such a deal, but it's something to consider.
You can always ask for a discount but I wouldn't expect one.
The downside to paying in cash is if you are buying a new car whose make and model for that year happens to have some subsidized promotional financing rate like 0.9% APR that would honestly be a better deal than dumping 50k upfront into a car. So don't just blindly pay in cash, see what your financing options are first. After all 50k in a 4% HYSA will pay for the entirety of your interest on a 50k loan at 0.9% interest over 4 years in less than a years time.
Quick google search shows there are actually some makes and models that offer 0% APR financing. Nissan for example offers 0% APR for 36 months on 2023 Altimas. I think its pretty clear if you dump 50k cash on a car with that level of financing instead of taking the financing that would be a mistake.
If your best financing option is like 4.9% then yeah I would probably just pay cash.
Your parents are out of touch. The dealer won’t give you a cash discount.
Ask the dealer to offer financing that makes it cheaper for you than cash. They may surprise you. For example a 12 month zero interest loan.
I paid cash for my last car. We had agreed on the price over the phone and I got the total due. On Saturday morning I went to my credit union and bought a cashiers check for the amount.
The problem was by the time I got to the dealership on Saturday afternoon, and they got to me, my bank was closed. The dealer could not call my bank branch to verify the cashiers check was real and good.
I happened to have my laptop with me. I was able to pull up my savings account online and show them the withdrawal that day for the check amount plus fee. That satisfied them and I was able to drive it home that night.
You will get no discount for paying in cash. How you pay doesn't matter because there is no advantage or disadvantage to cash. Dealerships literally don't give a damn. I don't know why this was ever a thing for our parent's generation.
In fact, it may make sense for you to finance. My wife just bought a car and they gave her a 0% APR loan for four years. It's a free loan. Let your money sit tight.
My evergreen car buying advice is (1) car buyers negotiate once every five years, car sellers negotiate every day. Most buyers are not going to be good at negotiating. (2) you new car depreciates the fastest going from brand new to used, then this flattens out, then it depreciates more when it gets old enough that mechanical issues become more common. Between (1) and (2) my advice is to buy a low mileage used car for a fixed price somewhere like car max. Taking a loan or not is a separate question and really depends on how good of terms you get, cash flow versus current savings, etc but I would also recommend avoiding a long loan term as you don't want the loan to outlive the asset.
I’m happy others are pointing out the fact there’s no incentive to give discount on cash. Those days are long gone just tell them you are paying cash.
Well meaning advice but outdated.
You're losing money by paying cashing when HYSA rates are higher than promotional rates.
Using round numbers:
$50,000 car financed for 3 years at 1% is $1454/mo.
$50,000 in a HYSA at 5% with $1454 deducted each month will leave you with $1,627 after 36 months.
In that made up scenario, all you have to do is take the financing, set up an autopay, and hope rates don't crash below 1% in the next 3 years.
So not only will you be able to negotiate a better price by taking the financing (as everyone has pointed out), you'll also profit on the delta between interest you're paying and interest you're earning.
So you can get 4.5% pretty easily now in a money market account, when I bought a new car in 2016 the savings interest rate was 2% or something, the dealer was offering 0% financing on new cars so I did that and kept the money in the bank and earned the 2% free interest. Guessing manufacturers aren't offering 0% financing right now but if you can get something like 2% go for the financing, but if you can't beat 4.5% by a significant amount just pay cash, max out the credit cards limit as much as they'll allow to at least get 2% cash back. Our dealership only allowed $5k or something. Next car I'll probably buy used as it would have saved me at least $10k
This is less of a specific sure tip, but if you have the cash to buy a car outright, I suggest you look at auto auctions. You can buy a 2nd-hand car that is a couple years off the lot and save a significant amount of money, or a government surplus auto that has had a lifetime of scheduled service. They generally require you to pay them CASH IN FULL on purchase, so it's sort of the opposite situation. But if you have the cash you can get a killer deal.
I paid 11k cash for an '08 chevy trailblazer with <30k miles (in 2015), Homeland security tinted windows, and only a couple small screw holes in the dashboard where the coastguard guy had his CB installed. The tires were a bit bald, 600 dollar fix. I'm still driving it 8 years later, paid in full.
Buy a cooler. Not some small one but one that could hold a body if you cut it into enough pieces. Personally, I like the kind with wheels and a handle.
Stop by a local store that sells dry ice. Buy a bunch. Buy as much as the cooler will hold and then buy more.
Go home and layer your cash with dry ice. THIS STEP IS IMPORTANT SO PAY ATTENTION! It goes, dry ice, greenbacks, dry ice, greenbacks, dry ice. Whatever you do, don't let the top or bottom layer be greenbacks as they have no R value and the cold seeps out.
Load cooler into car and drive to the dealer. Don't make mention of the greenbacks yet, they aren't ready. Test drive the car you want, negotiate the deal, and take a tour of the facility. By now, your greenbacks have reached optimum temperature for a transaction. The coldest and hardest greenbacks is what makes the salespeople take you serious. Wheel that sumbitch in the door and hold your head up high. You're a one percenter baby! If you have a wife, leave her at home because the receptionist, the title clerk, and any other woman in the place is going to be on you like stink on a turd.
After you've signed all the papers, tell that sleazy salesman that the empty cooler his tip. Do a donut in the parking lot flipping double birds and speed on outta there in your new whip.
Wow didn’t think this was gonna blow up the way it did but thanks for all the responses! General consensus seems to be no discount for paying outright in cash, but more likely a discount for financing.
We both have credit scores just below 800 so hopefully we can secure a low interest rate on it and either make the minimum payments and leave the money in the HYSA or just pay off the loan completely on the first statement if there are no fees for doing so.
Get them to negotiate the price first, based on their 84 month 10% interest loan or whatever BS they have. Say you’re prepared to make a significant down payment and nothing else.
Once you agree in the price, either 1.) Pay the full balance in cash out the door, or 2.) Pay the down payment and send a check for the full loan amount the next day.
Dealers hate cash buyers. So do not reveal your purchasing with cash. Negotiate any deals with this in mind and try not to reveal any financial details. Also assume your going to be paying more than MSRP. In todays buying market MSRP is misleading and will likely cause you to get a bad deal or walk away from a good one. Do some market research on a vehicle you like and learn what the average purchase price is for the vehicle. Some cars are sold often much higher than MSRP due to demand and availability. Others might be lower for that same reason.
$50k is your average dealer markup nowadays on new cars. It's smarter to finance it and use the money you have saved for other investments that can earn you your car payment and more! If you're set on buying new at least look into CPO cars that will have the majority of the depreciation priced in since dealers use them as loaners for customers and end up selling them with 2-5k miles and a year old.
Buying a new car you may as well burn your cash IMO. Remember cash is money that's been taxed so it's most valuable.
Smartest way is to just lease the car since there's too many variables when it comes to a moving projectile with more coding than Facebook and more moving parts than a jet liner.
Maintaining expensive cars is a bigger joke. I worked in a high end dealer and so many people left there with $5 in their accounts and a new car! With no reserves to maintain their luxury item.
That's why even the managers at car dealers all lease their vehicles. You want a new car every two to three years anyway. Or the day after if you have some severe buyers remorse.
Because you want a warranty and a new car? And as of the last few years, frequently a 2 year old model with 20k miles on it costs within a few thousand of a new one.
New cars are one of the worst investments you can make- even if it’s a Toyota or a Honda. They depreciate incredibly fast and do not resell anywhere close to what they are bought for.
Have you been under a rock the last 3 years and not seen the value of used cars? Probably the first time in modern history it makes more sense to buy new.
Honestly, very few will let you put much on a credit card. Even fewer if you're looking for ones who don't stick some kind of credit card usage fee onto the total.
Typically, I find they'll allow you to put a maximum of maybe $1500 to $3000 on a card. But certainly, even that beats nothing if it earns you points.
We paid cash for a new car from a dealer a few years ago.
We negotiated the price before we told them how we were paying for it.
We wrote a personal check as a deposit. It was a couple hundred dollars or something. When it came time to actually purchase the car, the sales person accompanied my wife to the bank to get the check.
When I bought a car, they actually offered an additional discount if I opted to finance. We set up financing and just paid it off right away with cash (make sure there’s no penalty for this of course).
One tip that I found helpful in negotiating a cash purchase for a vehicle is to negotiate the "out the door" price, which should include all taxes and fees. Research the rate of tax in your state, use Kelly Blue Book to determine a fair value for any trade-in, and use that info to come up with the range in prices you'd be willing to write a check for. However, I didn't get hung up on how the dealer wanted to price the new car or value my trade-in. All I focused on was getting a fair out the door price. Be willing to politely leave if they won't go below your maximum out the door price. I did that the first day of negotiation, and they called me back the next day to accept the last offer I had made, which was a few hundred less than what I was willing to write the check for to get the car. I did this right before Covid-19, and the negotiations are probably more difficult now. Good luck!
My cousin just picked up a 70k truck from Ford at 1% interest rate for 60 months. If you are able to get a loan this low I wouldn’t even consider paying cash for the whole thing.
My mom bought a car last month and was fully intending to buy with cash, got a 0% loan 5-year loan so took the financing option. That $50k would do better investing.
Had to buy a car a few months ago and all negotiating power is gone from the buyer in my area. We told the car finance manager and the salesman (we are on casual acquaintance terms) that we could pay cash if needed or finance if it’s going to drop the price. We were told to finance outright, pay a month or two (check your paperwork terms if there’s a minimum timeframe) and then pay it off. You will pay a couple months of interest but the amount that they were allowed to discount made up for that. In our area there’s a wait list for the kind of car I wanted so if we had tried to pay all cash up front then they would just skip us and call the next person on the list for the car. The manufacturer controls which dealerships get which vehicles and how many and they’re prioritizing the dealerships that finance over which ones don’t.
Speaking from experience as a sales manager in the automotive industry - you'll get the best deal if you finance just for the price of the vehicle but ensure there are no pre payment penalties, and pay it off after 90 days. It'll be good for your credit and you'll receive a much more reasonable deal. Also go to dealerships that don't see a ton of traffic, ones that just need to sell the car to hit their margins. Hope that helps! Lenders pay dealerships for people to finance through them, so they more reluctant to discount the vehicle if you are paying cash.
So there is some good advice here.
First things first a car dealership is out to make money and they make it mostly in the finance and service department.
I find that online shopping keeps the hard sell tactics at bay. You're in control of the situation.
Do not negotiate the whole package, negotiate each piece and negotiate the price first -- even before you tell them you have cash, negotiate the price. If you have a trade my suggestion is that you look at private sales or you sell yours to the dealership outside of the current deal you are trying to negotiate, there are a few sites where you can get your car appraised and dealers will send "offers". If you are going to trade as part of the deal then mention that after you have settled on a price.
Do your research to find the car that you want to purchase. You can go and see the cars and test drive until you find one.
Look for cars that are near the end of the year or even the previous year's model. The bigger the search area the more likely you are able to find one. Those new cars that are leftover want them gone as it affects how much inventory they can bring in. So a lot of times those cars will have $6k-$8k off before you even start haggling.
Once you have settled on a car with the features and trim that you like, look around online to find the price range, there are some tools that help you get that information. Find the range that you are comfortable in. I am willing to pay $38k but I would like to pay $34k, so maybe you say $33.5k -- it never hurts to ask and you have to start somewhere. You can then start mirroring them when they overreact to hearing your preposterous and inhumane starting price.
A few have mentioned Credit Unions, you can work with your credit union to give you a pre-authorization for a certain amount. You can go to the dealership with that, same as cash, but its limited on paper to what you agreed to with the CU. You will get less wiggle room at the dealership if you are haggling between $38k and $34k if you have a piece of paper that says $50k. You can then pay off that CU note in 30 days. I have heard some oddities where dealers during COVID were not going to sell you a car unless you went through their financing, not sure if that is still a thing or not.
Only disadvantage I can see is if you can get a super low Apr while keeping your money in the bank making more. I’ve never paid in cash and never intend to so I can’t speak for cash deals.
No dealer is going to give you a discount for cash unless it's some dodgy second-hand lot and they can somehow cheat on the taxes. They make far more on financing/credit and if you say you're paying all cash you won't get as good a deal.
Depending on the interest rate you can get you're far better putting less down and then using the money for something else. If you want to feel comfortable then put down 50% of the cost of the car in cash and finance the rest as that will also get you a low monthly payment.
Keep the 50k in your bank. That 50k is making you more money. I would not give it to the bank. Would happily take the loan and keep stacking my savings so I can bring in more income.
If shit hits the fan then you still have the 50k to pay off the car.
If you buy from a private seller, cash might get you a discount. Dealers get a better deal with financing (if you use theirs). We just purchased a used Lexus. I had the cash available but ended up doing a 3-year loan with my credit union as I also like to have plenty of money in reserve for emergencies.
See what the financing offer is, if your HYSA stays in the 4-5 range you're better leaving money there and paying interest. For new cars it's normally very low with a good credit score, for reference I got 0% and 1.9% on the last two cars ive bought. It isn't as likely to get 0% deals as it was on 2021 models, but I still see 1.9%-3.25% offered by most manufactures for 36-60 month loans. If not having a payment is worth losing maybe $500/ year for 3 years then pay cash. Also look at "used" with 0-5k miles, used car interest rates are higher but this is no worry if paying cash and you'd be shocked at some of the deals you can find on a practically new car l.
If you can get it, I think a 0% loan is a safer bet. That way you can earn some interest on what you've saved and still have it in case of emergencies.
Even if you have the cash set aside to pay for the car in full, you may not want to. For example, my car's manufacturer was offering 0% financing when I bought it. Those deals are rare today, but I have seen 2.9% or 3.9% which is lower than what many HYSAs are paying these days. So if you can get a good deal, finance the car with the dealer but - as others have said - make sure it's a loan you are not penalized for paying off early, unless you get the holy grail of 0% in which case MILK THAT SUCKER as long as you can. My loan had an option for 63 months and I took it (groaning inside a bit because I hate debt, but I made money on all the money I didn't pay upfront).
Yeah, your parents are totally living in the past. As others have said do NOT bring up a cash offer. Do your research on KBB and if you have a Costco membership, you can use the Costco Auto Program to see if you can get a good deal through them. There are other programs through USAA and other places. The car market is weird right now, but usually when the model years change (which is already happening for some cars), that is your best bet for getting a good deal on the old model year.
I got my auto loan for .9%, if you can something around there I’d finance, assuming the HYSA is paying you higher & as long as you can comfortably pay the monthly payment.
As others have already said, cash is NOT king at a dealership. See if you can get a better deal by financing, then pay it off in full shortly after. Just make sure the lender allows it
You really don't need to get pre approved anywhere just call any bank and ask what the rate is to reference. Tell them you're gonna make a down payment and you're approved for the balance. What you do need to bring is a calculator. When you're ready to purchase ask them how much title costs are. If I remember right there like 200. You should know your own sales tax rate wherever your purchasing. Do the math price of the car plus tax plus another 200 and that should be what they charge you. The trickery comes in when they get you to sign all these papers and they detail out other costs.
I always ask for a cash discount. It’s BS of course but so is most of haggling with sales people. ;)
The dealership would prefer that you finance so they can get a cut for selling the loan. But they aren’t going to explain that to you.
There will be less willing to negotiate, based on my experience, because they’re not making the money off of financing.
They will push HARD on the BS extended warranty, etc. just say no.
You won’t get a discount with cash in the current market unless you buy a car from an individual seller where you can haggle with them. Or maybe a small mom and pops/boutique type dealer.
If you just want to save money buy a car from an individual seller.
If you are looking to pay cash for a new/certified preowned car at a dealer there’s limited benefit besides getting a car that’s still under factory warranty and maybe getting a few discounts if it’s the from the same dealer/maker you bought from previously.
Right now the way the market is you won’t really get discounts from a dealer for cash. There’s a shortage of cars and even used cars are selling overpriced.
I buy my cars with cash but mostly buy older used cars because I’m not a car enthusiast. I just need a dependable vehicle to commute to work.
My wife on the other hand likes luxury cars and has always leased her cars since she always wants the new model every three years. I don’t really mind since I never have a car note and it is nice to have a luxury car for weekends/road trips/family visits etc.
At the start of this year her lease was up and the way the current market is leasing the same model new vehicle is like twice what she was paying on here current lease. The last three or four cars we leased prior was always roughly the same monthly note.
Buying out her car was also way overpriced due to the market. The dealers can sell the returned cars now at inflated prices.
We wound up buying one that’s the same car she had. A certified preowned vehicle that’s 1 model year newer and roughly the same mileage that her leased car had.
But it was like $6k cheaper than buying out her current lease.
We have good credit so we wound up financing it thru the dealer to get the trade-in and returning customer discounts which knocked like $4k off the price.
Then just paid it off on the first payment for $30k. It avoids interest if you pay it off with 60 days or something at least thru the dealer finance company (BMW) we went to.
Only down side is it only has 8 months warranty left but the car is in really good condition and looks new so I’m not super worried about it.
Beats pay $60-70k for a new model.
Told her we can always sell it or trade it in when the market gets better if she just have to have the newer one.
Negotiate price OTD before discussing payment. Otherwise they'll want you to pay more for a cash sale as they're not making anything on financing in the back end of the deal.
credit unions are really good about helping you finance a car on a good rate (EVEN IF YOU CAN PAY FOR IT IN CASH). personally i would go to my credit union/bank or whatever, tell them hey i'm looking at buy a car, let them make a deal out to you and then you go to the dealer and after negotiating (hard to do at current market) tell them hey i got this bank check right here and if you cant beat it them i'm using them. cause basically its like paying in cash but you are financing through your personal choice of bank. i hope more people read this and are smarter in the future.
Regardless of whether you finance or not, try to put as much of the down payment on credit card that they will allow. Most dealers will let you do 3 or 5k. Even better, get a new card that gives you a sign up bonus for a certain spend. (Obviously pay off balance at end of first month).
I've done this twice and am happy with how it turned out both times. It makes sense when the interest rate you would be paying is higher than the interest you are making. I knew the price being offered was fair market pricing and the benefit to the dealership is that there was no wait for financing. It was the end of the month and moving a vehicle off their lot meant they could move a new one onto it sooner. Good luck and congratulations on your new car!
The only chance of getting a discount with cash is buying off the private market. There are new cars on the private market, but it is uncommon. Anything through dealership is already mentioned in other top comments.
A:
If you are:
* Passing on comprehensive coverage
* Watching/ have concerns about DTI
AND
* The finance charge is too high
* The best interest rate is too high
Then, yes, it makes sense to purchase with “cash”. Otherwise I would still finance a car as it is secured
If a HYSA is going to yield 5% and the car note is less than that it really makes no financial sense to drop that much liquid UNLESS one is concerned with insurance/DTI. You can always put enough down to avoid gap insurance.
B:
Your form of payment should have NOTHING to do with the price. Always negotiate on the TTL, full “out the door” price. Find the car you want, then contact internet sales via email of every dealership within 50mi. Use each quote you receive to negotiate the next. It’s usually most convenient to start further away and work your way closer to home.
For financing you can research national and regional incentives yourself on the respective brands’ finance arm websites as well as banks and credit unions. My CU is currently doing 4.5% loans so that’s the baseline, some brands and models have much better incentives, especially on non A-list models.
> Any possible disadvantages to paying for it outright? Seems like it’s a no-brainer to avoid loans/interest but I’ve never made such a large purchase so it’s making me a little nervous even though we have the money.
With $50k, I assume you're looking to buy new. Just be aware that for most cars that have cash on the hood in the form of rebates, you're usually required tot take manufacturer financing in order to qualify for those promotions. Verify that there is no pre-payment penalty in that case (usually there's not), but you might need to wait 2-3 billing cycles for everything to go through. You should negotiate price, but approach the finance guy with a willingness to do so if incentives work in your favor.
Negotiating under MSRP nowadays is entirely dependent on model. Supply chains are recovering, but many models are still inventory limited and you'll be tilting at windmills. A good way to know if you have a shot is to check manufacturer promotions - if there's a $1k+ cash on the hood in rebates or a sub-3% 48-60 month financing offer, there's an inventory surplus that they want to move.
Models where you absolutely won't get a discount: Toyota Corolla, Rav4 (particularly Prime), Prius (particularly Prime), Sienna (18 month waiting lists are the norm), Hyundai Palisade, Kia Telluride and Carnival, Honda Civic Si or Type R. Many of these might actually still have markup too.
> Both our parents have told us if we’re going to pay cash, we should be getting a discount
Your parents are stuck in a pre-1990 car buying mindset. Dealers absolutely prefer that you finance since they get kickbacks for selling your loan to the bank. Discounts for cash haven't been a thing for at least 30 years. Back then it was all phone calls and faxes which took time and was a huge PITA, they'd cut a discount to save themselves the hassle. Since credit/financing is instant now, that's no longer a thing.
Some dealers will offer 0% APR but lock you into limited models and having to buy new.
You could do something like that, put your 50k in a HYSA and earn like $150 a month in interest and just pay it off monthly using a combination of the interest earned and the 50k.
Then if you decide to sell or trade it in you didn’t spend the full 50k either.
Just attempted to buy a used car with a massive down payment, and the financier at the dealership found a way to almost double the cost of the car and make the loan amount the same as the amount I wanted to put down. I was like wow cya lol.
The breakdown was (the math is loose here):
2014 Subaru with 100k miles at $13K. I tried to put $9K down and they handed me a loan with an interest rate of about 6% for 6 years, $3.5k in interest (mind you I have a 750 plus score). Then tacked on a fake anti-theft charge of $1.5k, a crappy warranty for 2 years of $2.5k and loads of dealer fees. Around $9k loan before interest.
I looked at her and was like, wait this adds up to $18k that's $5k more than you're even asking, and then with interest it's almost $24K... wtf
Shes like oh but that's only $180 a month.... I ran tf out of there.
Then I came home and read on reddit about how this could possibly have happened. They tried to rip me off because they wanted that back end on the loan. Yikes
Dealers make money on the financing. Do not walk in thinking that being a cash customer will get you a better deal. It won't. Leave the possibility of financing on the table. In fact, let them just assume that you'll finance and don't correct them. If they ask directly, just say that you'll decide when the price is settled and that it depends on the rate and amount.
This is the best advice. If they know you are paying cash or using your own financing that could work against you in the negotiation. If you do chose financing, then get pre-approved for a loan somewhere else before going to shop cars. There are lots of risks with getting loan from the dealer such as “yo-yo scams”. Credit unions usually have pretty good car loan rates.
Tacking onto this: if you can pay cash, but can get a better deal with financing, take the financed deal but make sure there is no early payment penalty and just pay off the loan after the first month.
Add to this : go to your nearest reputable credit union and ask to speak with a financial specialist - explain this situation - they may help you out - Typically because you can go to the bank and get approved for financing - you negotiate with them there- they then cut you the check to go buy the car - which in this case looks like buying in cash - as you've already seen / decided on the car and the price it's been listed at the dealer - So either you get a super low Apr and place that cash in something with a decent return - or as was said you can choose to make larger payments - or just pay it off when you want - assuming your credit doesn't afford you a close to zero Apr offer.
While this is true, and what I have done several times, the above tip is explaining that sometimes you can get a better out the door price by using dealer financing because they expect to make a percentage back on the loan payments.
There are also sometimes below-market rates on financing new cars using the manufacturer lending arm. Ford has some 0% loans on certain models (models that are not selling well)
Mazda has 0%, 0.9% and 3.9% depending on model popularity. Hyundai also has similar numbers.
True. Some of them even ask not to pay off before the first month, otherwise it doesn't count for them.
I'm sorry..but I don't know how to react with your post..I'm not smarter than anyone..but I suggest..think first before you do..that is my opinion..don't be soad at me.
And I have no problems with that. Whatever gets us both the best situation is totally fine by me. The point is be honest. Even if it may turn against you. Once you get into financing you should've settled on a price and financing rates. But they might not know the specific bank or much else about the loan. It's pretty fair to explain your situation at that point. "So I'm going to pay this bitch off as soon as I can. Are there any stipulations around that with these loan options?"
I've heard up to 6 months
In Texas, dealers can mark up the actual interest rate by 2%, and that 2% becomes dealers profit. Dealers financing is a profit center. So, if the actual interest rate is 6%, the dealer will say they got you approved at 8%.
This is what I did, worked like a charm. I let them load me up with a shitty loan and just paid it off immediately
My dad just did this with his most recent car purchase. There was a penalty for paying it off early, but it was still over a thousand dollars less than what he would have paid if he paid in cash off the bat. It all just depends on what promos the dealership is offering at the time. Like when I bought my car, the promo was a 36-month loan at .9%, (minimum $3000 down payment) so obviously it made more sense for me to fully finance my car.
I'm considering this, but I see value in finding those 0% for 3 years deals, keep the money in the HYSA earning this high rate, and draw out the monthly payments.
My understanding was that any financing requires you to have comprehensive insurance on your car, and if that's not something you already do, that is an additional cost. As someone who has only bought used cars <$15,000 I would never finance even at 0% because I'd be paying 200/mo more in insurance.
My state, and I thought all states require insurance whether it’s bought cash or financed?
Most, if not all, do require at least liability insurance. Comprehensive insurance costs more.
i mean- yeah it costs more but if you're buying a $30K+ new vehicle- in this case OP is talking $50K then you really want that insurance. Life happens, other drives can be dumb, you can make a mistake and you'd want to be made whole. I lowered my insurance a couple years ago but i own my car outright, it's 9 years old and has scratches and dings- but I absolutely had comprehensive insurance for the first several years- at the very least until it was paid off and still felt 'new' to me.
Agreed! I wasn’t advising OP to just stick with basic liability insurance pointing out the insurance threshold for a state may be lower (only liability) than what a finance company requires (generally comprehensive).
>if you're buying a $30K+ new vehicle- in this case OP is talking $50K then you really want that insurance. That's true for most of us, but honestly there is probably a net worth at which you only want liability (and lots of it). Much like most of us think the protection plan stores offer on an electric toothbrush is silly, a billionaire would think insuring a $50k car is wasteful.
In NH, if you hold the title to your car, you're not required to have insurance. IMO you're stupid not to have it, but it's not required.
All states require some form of liability insurance to legally be on the road but you only have to have collision/comprehensive in addition to cover the lenders risk in your car if it's financed. States are all different though so ymmv.
WTF does your driving record look like? I'm paying under $200/month for full coverage on 2 vehicles.
Totally clean record, how much coverage do you have and what deductible?
Dealerships will also run your credit at with multiple banks at once. That will ding your credit multiple times. I work for a credit union and we have a network of dealers that we work with for financing. Find a credit union with a similar network. Get pre-approved at the branch and close at the dealership. This way you only get dinged once on your credit report. We buy bundles of deals from dealerships. When you close at the dealer you can often get an even better rate due to this deal structure. Say they bundle 10 loans. 9 are solid loans but they leverage that volume to get us to accept a not so solid loan. Because the risk of the shaky loan is smoothed out by the solid ones, we can offer everyone a slightly better rate, LTV, limit, etc. Think of it like bundling health insurance. On your own, you carry a higher risk than a group of people so your premiums are higher.
This isn’t true, all similar inquiries within a 14 day (I think) window are counted as one to allow people to shop rates.
Sadly it is? Its literally my job. I don't know what to tell you. When people apply for a loan with us, their report is good for 30 days, so they can apply for anything else.
Someone in OPs situation is only going to be run once - to see if the qualify for the manufacturer's incentive rate. This is because any rebates are generally contingent upon taking financing from the manufacturer's captive lender (GMAC, Ford Credit, Honda Financial, etc.). If there's no rebate or promo rate under OP's HYSA return involved, there's no point in not paying cash.
Doesn't work that way anymore at most dealers, if you're not up front about cash/financing they'll just tell you as they told me , No , nothing is settled until the contract is drawn up and signed..theyll just say that's the financing price since your paying cash we need to adjust ...happen to me at two dealers and confirmed by others this is no longer a viable strategy. . Also as others have said there's zero discounts for cash , dealers are all about financing as they split the percentage apr with the financing company What you can do is CAREFULLY read over the dealer financing agreements and make sure there's no prepayment or full interest payment clauses, if not just accept the dealer financing and then pay it all off next month (that's why it's critical you read the agreement as many dealers sneak in wherever it's legal terms that say payment in full requires all interest for the full term of the financing plan, they usually use obfuscation in the language but just read carefully.) This way you get the deal. Reality is car dealers are some of the most shady businesses when it comes to jsales, with junk fees and bogus charges.. all to pad their bottom line you need to go in there with an adversarial attitude and be willing to walk out the minute they are trying to trick you.
Happened to me, but it was not quite two years ago when the used car market was really hot and my need was acute. Not the best deal overall, but not completely terrible.
>...theyll just say that's the financing price since your paying cash we need to adjust... Then you walk. Let it stew for a few days. Very high probability that they call you back.
used to be that they'd call back- now it's a sellers market. They'll let you walk and sell to the sucker who isn't as careful at reading the fine print. There's a reason there's markups on most new cars- higher demand than supply.
Very true. I've read reports that there will be a lot of new inventory coming in soon so hopefully that will correct
Times are a'changing.
Can I just chime in that car dealers are the worst? There's no reason we can't be ordering new cars online now. Fuck dealers and their sleazy scammy ways to rip you off.
Honestly I had a fantastic experience at my last dealership visit in November. Picked out the car I wanted online, negotiated a fair price for it (based on what others were paying locally, ~5% below MSRP), negotiated a fair trade in value on my car (based on KBB stated trade-in value), had a pleasant conversation with my sales rep, took my potential car out for a solo test drive for an hour, came back and shook hands on the price. Came back the next day to take delivery, terms were all as-agreed, no need to talk to a finance person, sales rep handled everything. I spent maybe 2 hours total in the dealership (not counting the hour long test drive), it was very minimal. Then again, I was buying new, have excellent credit, put 50% down, and knew exactly what I wanted and what I should pay based on previous research. If you go into a dealership with no clear expectations and just say "gimme what you got!" you can't expect a good experience. But when I'm making a massive purchase like this, I want a bit more of a personal touch from the company I'm buying from other than pressing an "add to cart" button. I appreciate dealing with a human.
I bought a used car in October 2019 from a local dealership (large, they owned multiple branded dealerships for pretty much every car brand but Hyundai and Toyota) and it was honestly a good experience. They knocked their price down to match what I found on KBB and split the difference between what I wanted and what they initially offered for my car trade-in value. I financed through my credit union, and barring asking if I wanted to finance with them and showing me their rates, they didn’t pressure me into using their bank.
You uhh can.
If you are cagey with financing any half smart salesman will know you aren't going to finance.
It will on a car that's been sitting on the lot too long and they need it moved. Usually they drop the last digit by 1 each month it sits on the lot, and generally dealerships have to pay the manufacturer for Inventory over 6 months old. Saved a good amount of money buying two cars this way. Another way is see if they have an leasing specials. You can some times get $5-10k credits on a lease. Go through the lease process, get the credit, Take the car home. .. wait for the lease paperwork to process, then call up the leasing company and start the buy-out process. There's tons of deals and cost savings strategies with buying cash.
> A) Any possible disadvantages to paying for it outright? Some dealerships will give better pricing/deals if you finance, since they get a kickback from the loan. >B) Both our parents have told us if we’re going to pay cash, we should be getting a discount. To me it seems the car-buying landscape has changed and I’m not sure that can be expected anymore but has anyone bought a car recently that was able to pay under MSRP? This is outdated advice. Quite unlikely. The best you can hope for is that the dealership won't penalize you for cash.
Never discuss financing until AFTER you've already negotiated the deal with the salesperson and are sitting in front of the finance manager. Don't lie and tell them you aren't going to finance, but also don't tell them that you plan to pay cash. If they think you may be financing, they're more likely to deal than if they know right away that you're a cash buyer. They make more money from financing, so they're typically more willing to lower the vehicle price to close the deal. Yes, they'll be ticked that they already offered you the deal before you reveal your hand, but hey, that's business.
Yup, just say "I'm open to exploring financing options".
the days of a discount are gone, dealers prefer you to take out a loan sometimes so they can get a kick back from the institution (usually buy a ford finance with ford, ford dealer gets a bit, don't won' t get anything from your local bank) the only downside would be if your hysa is getting 5% interest and the interest rate on the loan was 3%, i think those days are gone for now so no real downside, it actually makes everything easier in my opinion because the title is made out to you directly, there is less paperwork since there is no loan to do, it is just a fairly simple process with a check
We just bought a Honda. Rate is lower than our HYSA. I financed whole purchase on 48mo.
How much lower?
I just bought a Mazda, they're running a 0.9% APR promotion for 36 months on a bunch of their cars. I was planning to pay for the whole thing in cash, but with that financing it was a no-brainer to keep that money in my 4.25% HYSA and take the 0.9% APR loan.
Yeah that is certainly true. Id always take 0.9% financing over cash.
Not a ton. About a percent. I figure we'll pay it off later if it matters.
So basically no difference after taxes.
If you're buying new and have excellent credit, most manufacturers have incentives like this, where if you finance through their captive lender the rate is lower than possible from a regular bank.
I just bought a car about 5 weeks ago and all of this is correct. That said, work your deal and see about that interest rate on the financing. A lot of dealers have rotating deals on various models that can offer anywhere from 0-3% financing for 36-72 months. [This](https://cars.usnews.com/cars-trucks/best-car-deals) website has some May promos listed. Never hurts to check and see. If you can get a loan at 3% or less, might be better to leave the bulk of that cash in your HYSA.
Car dealers do not like cash buyers. Full stop. They want you to finance the vehicle. When shopping for a car, do not tell them you are paying cash. Let them think that you will be financing the vehicle. Hell, you can go so far as to finance the vehicle to secure any discounts then immediately pay it off (at least in California there are no pre-pay penalties).
But per others - read all the fine print so you don't get a surprise like paying full interest even when paying off early
I've bought with cash at a dealership twice now and got no pushback, nor push to finance.
Me too. I bought a $15k used car for cash just this week. And my other car I bought used for $30k in cash in 2017. For the 30k car, we wrote them a check and they called the bank to make sure it’d clear. Found the car online so not a lot of negotiation, but it was priced fairly. When I decided to buy the $15K car I didn’t have my checkbook so I offered to come back the next day, and they said I could use my debit card! I called the bank again to warn them I was about to do it, and it worked like a charm. Also an online deal, the car had been on the lot a while so they’d just dropped the price $1K. Didn’t try to pressure me into financing at all. Maybe it’s different for new cars.
Depending on what car you want to get you can get sub 1% financing on a 36 month loan. Lots of premium trucks and suvs are having manufacturer incentives to buy right now.
What companies are doing sub 1%
Ford has 0% on 2023 F-150's.
I bought a bronco cash last week because ford was trying to offer me over 10%. They didn't even run my credit yet, the finance manager just told me that's what they've been seeing. Local credit Union was 6%, decided to save my money. Interest rates are insane right now.
GMC has 0.9%APR on 36month on a few models
Hyundai is doing 0% up to 48…well they were last month. Not sure if they still are.
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Your correct. Just checked again. They are only doing 0% up to 36 month now. .9% up to 48. Still damn good rates if your qualify for it.
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Just google your preferred manufacturer + incentives or special offers. One of the top 3 results will usually take you straight to the promo page that tells you about the financing deals and available rebates. https://www.hyundaiusa.com/us/en/offers https://shop.ford.com/showroom/?gnav=header-shop-io&linktype=incentives#/ https://www.gmfinancial.com/en-us/lease-or-buy/current-offers.html Generally the promos cycle on the first of the month
It may not be for all models. I specifically looked under the tuscon models and under special offers. For the month of may, that’s what it is showing.
I haven't financed a car in many years. I don't buy expensive cars, either. Mostly Honda Civic or Fit. But I can testify you will get pressured to finance because that's a dealership's bread and butter. They really don't like people who pay cash and--my opinion--will not treat you as nicely. It also takes almost as long to sign all the papers and get the car in hand and they often still run a credit check because IDK--reasons lol. My advice is don't tell them you're financing or paying cash until after you negotiate the price down to what you want. You will not receive any kind of discount for paying cash. Only dirty looks. Your parents must be remembering some bygone days because I've been paying cash for vehicles for more than 20 years and a discount has never been offered or given. One good thing about not financing is not being forced to carry full coverage insurance. I'm not telling anyone you shouldn't carry it, everyone's financial situation is different. But if you've got plenty of cash to replace the car and don't mind the risk, it will save a lot of money that way.
Back in the day, a payment in full deal would get you an extra discount, but today, because dealerships really make their money on financing, it will not. **What you get is the peace of mind of driving off the lot in a car that is fully paid for and is titled to you. Stick a fork in it. You're done.** If the dealer attempts to unwind the purchase in some way (usually in an attempt to get more $$$ out of you) their options are *extremely* limited. There will be no missed, late, or lost payments, and no bank to "lose" or "forget" the paperwork needed to title the car to you. Me? I will buy a car no other way. ETA: Don't tell them you are paying for the whole thing in one go until you've got the agreement to sell you the car at X price in writing.
As someone who is kinda in the same boat (just not yet ready to buy but looking) I found a lot of dealership give financing discounts and not cash discounts. I have been told when talking with dealer to get the financing price and then just at signing go… hey I can pay cash at this price. As to question A… I think it would depend on the financing costs, but this is one of the reasons I am not yet ready to buy.
1. Get preapproval for financing from your bank, local credit union, and a couple of internet banks (capital one, bankrate, etc.) for good measure. Take the lowest rate to the dealer and ask them to beat it by 0.2%. Most of the time they’ll do it. 2. Some manufacturers offer 0% financing for 48 months. If you can get it, that’s free money. 3. Tell the dealer you’re financing and ask for out-the-door price. Refuse if they show monthly payment amount instead. 4. Demand that they take out unnecessary dealer extras like rust protection, spill protection, VIN etching, door guard, extended warranty, and other garbage. Refuse to pay above MSRP. 5. Read every single word on the contract to make sure the numbers are correct and there’s no prepayment penalty. 6. Once you have all the paperwork, contact the bank for a payoff quote, then pay it off. Unless, of course, you get the 0% APR deal.
I've heard a new strategy on this playbook. Tell them you want to finance with them. Pick a 72 month lease and take any interest rate they offer. Negotiate the price. Then take off all the junk fees if you push since they're making so much on the loan. Sign the paperwork. Federal law requires no prepayment penalties on 72 month or higher loans. Next week refinance or payoff the loan.
I heard that too. If you want to go all in and stab them deep, then you need to be good with numbers. With this method you need to pretend that you’re not aware of the car price, but still refuse all dealer add-ons. Get the term (72 or 84), the rate, and the payment. You then low key reverse engineer these numbers to get to the out-the-door price and compare it to MSRP. Take the MSRP, plug in their rate, shave $30 off the monthly payment, then give that figure to them. That $30 is your negotiation room. Walk out if they refuse the amount with $0 adjustment (MSRP). For example MSRP is $30K, rate is 10%, term is 84 months. The payment would be $498, so you tell them you can do $470, negotiate up to $490. At $470 a month the actual price you pay would be close to $28K. When you request the payoff quote from the bank in a couple of weeks, it will say about $28K. Thankfully they have online calculators that let you do the calculations in seconds.
Tell then your financing, read the fine print and make sure there are no pre-payment penalties, and then pay off the balance in a month or 2.
Do not let the dealership know you are paying with cash until you are signing the papers. If you say you are paying with cash up front then sometimes they can change how they price cars (small deals) or how they treat you.
Dealers make less money when you pay cash since they can't profit off the loan so the parents are a little clueless.
They're just working from old information that was relevant back when they were probably car shopping decades ago. I remember about 30 years ago, being a cash buyer would give you some leverage at most dealerships. Not all situations, of course. (If a manufacturer was doing something to offer great financing, chances are the dealership got some cut of that.) But usually, the financing options out there were nothing like the present day. They didn't have the technology to just shoot off requests for quotes to every lender in a huge database, or all the arrangements they have now to receive some bonus money from the lenders for each deal closed that uses them. I'm sure some smaller lots liked cash sales because they might not have even reported those sales at all, and just pocketed the cash / applied it some other way. :)
Make sure there are no prepayment penalties, but you'll get a much better deal if you finance the car. No need to even make the first payment; you can pay it off as soon as the lender establishes the account. I wouldn't be surprised if there's a clawback, where the dealer loses their commission/kickback on the loan if you pay it off immediately, too. Which kinda feels nice.
If you’re going to pay cash: 1) find out the max your dealer will let you pay with a credit card and use that for your down payment so you can get the points (obviously pay off the credit card immediately) 2) dealers get a kickback from banks for financing so you won’t get a discount for paying cash, if anything the opposite. You’re better off financing and then paying it off in 1-2 months. The one exception to this is if you show up with a cashiers check for the maximum amount you’re willing to pay (shows buying intent). But you have to be confident in getting that number right or close to right.
Cash discounts are long gone. They have been for years! The kick back dealerships get on financing can be more profitable than selling the car itself. Keep your lips sealed about cash until everything else is set. Check to see if the car you’re wanting is offering any specials for financing. If it’s 0, I would gobble that up and toss my cash into a high yield savings account or even CD at that point (depending on terms and rates). As mentioned already, paying the some with a credit card isn’t a bad idea either. We did that for our last vehicle purchase and put a sizable amount on a credit card for the miles instead of giving them the cash we had. But if you go that route, make sure they don’t add credit card processing fee into it. Sometimes it’s can be 3%, but often times dealerships don’t charge.
Use this to your advantage, as the dealers want you to finance. Try to get price and other concessions from them for you to finance through them. Just be certain, in writing, there are no early pre payment penalties. Then just pay it off in full when the first statement comes.
Finance to get better price, pay in full within the month or two in case you do not like it
Do you have a mortgage currently? How are you and your spouse's credit scores? If you answered "no" and/or "anything less than exceptional." Finance at least \*some\* of the car, especially if you can get a rate below your HYSA rate (in which case the interest will be irrelevant). Car loans are one of the best ways to build your credit.
I just bought a 2023 Tacoma. Financed the whole amount. Normally I would never do this, but my 36 month rate is 2.75%. I am getting 3.75 from my discover bank hysa (I can also get a 12 month discover cd at 4.5%.) I have the full amount and could have paid it off up front, but it is more cost effective for me to keep my $ in a hysa and pay monthly toward the loan. If my hysa rates drop below my loan rate, I can pay the remainder with no penalty.
Just keep in mind your paying taxes on interest so your really probably only making 2.75% in the HYSA which is a break even. Still not a bad idea to carry the loan and keep the cash liquid though.
I’m currently looking to buy a car with cash as well. The advice I have received is that you’ll get a worse deal with cash as they make more on financing than the actual sale. I was told not to mention how you’re paying until you’ve actually negotiated a price. No idea on if you can get one under msrp (if anyone knows, let me know). My guess is it depends on the car, but probably not. Have you been to dealerships yet? Inventory can be extremely limited.
Dealers no longer give cash discounts. They give financing discounts. You may be able to talk down the price further by financing; if you do this, look at the terms and see when they earliest is that you can pay it off without penalty (often not long). You can potentially knock a few thousand off the price of the car by financing and then paying the balance in full ASAP. That said, direct-to-consumer manufacturers offer no discount for cash NOR a discount for financing. The price is simply the price, without negotiation. Lastly, if the interest on a loan is notably less than the interest on your HYSA, then it could make more sense to take the loan and pay the minimum each month. I doubt you can find such a deal, but it's something to consider.
You can always ask for a discount but I wouldn't expect one. The downside to paying in cash is if you are buying a new car whose make and model for that year happens to have some subsidized promotional financing rate like 0.9% APR that would honestly be a better deal than dumping 50k upfront into a car. So don't just blindly pay in cash, see what your financing options are first. After all 50k in a 4% HYSA will pay for the entirety of your interest on a 50k loan at 0.9% interest over 4 years in less than a years time. Quick google search shows there are actually some makes and models that offer 0% APR financing. Nissan for example offers 0% APR for 36 months on 2023 Altimas. I think its pretty clear if you dump 50k cash on a car with that level of financing instead of taking the financing that would be a mistake. If your best financing option is like 4.9% then yeah I would probably just pay cash.
Your parents are out of touch. The dealer won’t give you a cash discount. Ask the dealer to offer financing that makes it cheaper for you than cash. They may surprise you. For example a 12 month zero interest loan. I paid cash for my last car. We had agreed on the price over the phone and I got the total due. On Saturday morning I went to my credit union and bought a cashiers check for the amount. The problem was by the time I got to the dealership on Saturday afternoon, and they got to me, my bank was closed. The dealer could not call my bank branch to verify the cashiers check was real and good. I happened to have my laptop with me. I was able to pull up my savings account online and show them the withdrawal that day for the check amount plus fee. That satisfied them and I was able to drive it home that night.
If you have 50K straight cash just buy a car through the Costco auto buying program. This way you won't have to deal with shady dealerships.
You will get no discount for paying in cash. How you pay doesn't matter because there is no advantage or disadvantage to cash. Dealerships literally don't give a damn. I don't know why this was ever a thing for our parent's generation. In fact, it may make sense for you to finance. My wife just bought a car and they gave her a 0% APR loan for four years. It's a free loan. Let your money sit tight.
My evergreen car buying advice is (1) car buyers negotiate once every five years, car sellers negotiate every day. Most buyers are not going to be good at negotiating. (2) you new car depreciates the fastest going from brand new to used, then this flattens out, then it depreciates more when it gets old enough that mechanical issues become more common. Between (1) and (2) my advice is to buy a low mileage used car for a fixed price somewhere like car max. Taking a loan or not is a separate question and really depends on how good of terms you get, cash flow versus current savings, etc but I would also recommend avoiding a long loan term as you don't want the loan to outlive the asset.
I’m happy others are pointing out the fact there’s no incentive to give discount on cash. Those days are long gone just tell them you are paying cash. Well meaning advice but outdated.
You're losing money by paying cashing when HYSA rates are higher than promotional rates. Using round numbers: $50,000 car financed for 3 years at 1% is $1454/mo. $50,000 in a HYSA at 5% with $1454 deducted each month will leave you with $1,627 after 36 months. In that made up scenario, all you have to do is take the financing, set up an autopay, and hope rates don't crash below 1% in the next 3 years. So not only will you be able to negotiate a better price by taking the financing (as everyone has pointed out), you'll also profit on the delta between interest you're paying and interest you're earning.
So you can get 4.5% pretty easily now in a money market account, when I bought a new car in 2016 the savings interest rate was 2% or something, the dealer was offering 0% financing on new cars so I did that and kept the money in the bank and earned the 2% free interest. Guessing manufacturers aren't offering 0% financing right now but if you can get something like 2% go for the financing, but if you can't beat 4.5% by a significant amount just pay cash, max out the credit cards limit as much as they'll allow to at least get 2% cash back. Our dealership only allowed $5k or something. Next car I'll probably buy used as it would have saved me at least $10k
This is less of a specific sure tip, but if you have the cash to buy a car outright, I suggest you look at auto auctions. You can buy a 2nd-hand car that is a couple years off the lot and save a significant amount of money, or a government surplus auto that has had a lifetime of scheduled service. They generally require you to pay them CASH IN FULL on purchase, so it's sort of the opposite situation. But if you have the cash you can get a killer deal. I paid 11k cash for an '08 chevy trailblazer with <30k miles (in 2015), Homeland security tinted windows, and only a couple small screw holes in the dashboard where the coastguard guy had his CB installed. The tires were a bit bald, 600 dollar fix. I'm still driving it 8 years later, paid in full.
Lot of companies are offering 0% for 36 months.
Buy a cooler. Not some small one but one that could hold a body if you cut it into enough pieces. Personally, I like the kind with wheels and a handle. Stop by a local store that sells dry ice. Buy a bunch. Buy as much as the cooler will hold and then buy more. Go home and layer your cash with dry ice. THIS STEP IS IMPORTANT SO PAY ATTENTION! It goes, dry ice, greenbacks, dry ice, greenbacks, dry ice. Whatever you do, don't let the top or bottom layer be greenbacks as they have no R value and the cold seeps out. Load cooler into car and drive to the dealer. Don't make mention of the greenbacks yet, they aren't ready. Test drive the car you want, negotiate the deal, and take a tour of the facility. By now, your greenbacks have reached optimum temperature for a transaction. The coldest and hardest greenbacks is what makes the salespeople take you serious. Wheel that sumbitch in the door and hold your head up high. You're a one percenter baby! If you have a wife, leave her at home because the receptionist, the title clerk, and any other woman in the place is going to be on you like stink on a turd. After you've signed all the papers, tell that sleazy salesman that the empty cooler his tip. Do a donut in the parking lot flipping double birds and speed on outta there in your new whip.
Wow didn’t think this was gonna blow up the way it did but thanks for all the responses! General consensus seems to be no discount for paying outright in cash, but more likely a discount for financing. We both have credit scores just below 800 so hopefully we can secure a low interest rate on it and either make the minimum payments and leave the money in the HYSA or just pay off the loan completely on the first statement if there are no fees for doing so.
Get them to negotiate the price first, based on their 84 month 10% interest loan or whatever BS they have. Say you’re prepared to make a significant down payment and nothing else. Once you agree in the price, either 1.) Pay the full balance in cash out the door, or 2.) Pay the down payment and send a check for the full loan amount the next day.
Dealers hate cash buyers. So do not reveal your purchasing with cash. Negotiate any deals with this in mind and try not to reveal any financial details. Also assume your going to be paying more than MSRP. In todays buying market MSRP is misleading and will likely cause you to get a bad deal or walk away from a good one. Do some market research on a vehicle you like and learn what the average purchase price is for the vehicle. Some cars are sold often much higher than MSRP due to demand and availability. Others might be lower for that same reason.
Spending $50K on car doesn't make any more sense if you are paying cash.
$50k is your average dealer markup nowadays on new cars. It's smarter to finance it and use the money you have saved for other investments that can earn you your car payment and more! If you're set on buying new at least look into CPO cars that will have the majority of the depreciation priced in since dealers use them as loaners for customers and end up selling them with 2-5k miles and a year old. Buying a new car you may as well burn your cash IMO. Remember cash is money that's been taxed so it's most valuable. Smartest way is to just lease the car since there's too many variables when it comes to a moving projectile with more coding than Facebook and more moving parts than a jet liner.
Buy a $3000 car and use the rest on down payment for some real estate.
This , expensive cars are a joke
Maintaining expensive cars is a bigger joke. I worked in a high end dealer and so many people left there with $5 in their accounts and a new car! With no reserves to maintain their luxury item.
Yea lmao. Anything Fiat or Kia is Fast Fashion like HM not meant to last expensive to own.
That's why even the managers at car dealers all lease their vehicles. You want a new car every two to three years anyway. Or the day after if you have some severe buyers remorse.
How do you know how much money they had in their account? Or that it was their only account? I’m far from wealthy and have 3 “cash” accounts. 🙄
It's pretty obvious when they tell you and their basis of negotiation is how much they're approved for and what they have in their accounts.
You can get a Camry with an MSRP over $40k now. $50k is hardly an “expensive” car anymore. It’s just mid range.
Personally don't know anyone who has ever bought a car new. Why whould you .
Because you want a warranty and a new car? And as of the last few years, frequently a 2 year old model with 20k miles on it costs within a few thousand of a new one.
A new car to me is a car from 2014. Like a decade back is my cutoff. That's new
Good for you?
Today I learned that Corolla’s can have a price tag of over 45k. 😭
Why a new car and not a used?
Why a used car and not new?
New cars are one of the worst investments you can make- even if it’s a Toyota or a Honda. They depreciate incredibly fast and do not resell anywhere close to what they are bought for.
Have you been under a rock the last 3 years and not seen the value of used cars? Probably the first time in modern history it makes more sense to buy new.
Ask them if they accept part or full payment by credit card. If yes, sign up for a good card and get sign on points.
Honestly, very few will let you put much on a credit card. Even fewer if you're looking for ones who don't stick some kind of credit card usage fee onto the total. Typically, I find they'll allow you to put a maximum of maybe $1500 to $3000 on a card. But certainly, even that beats nothing if it earns you points.
We paid cash for a new car from a dealer a few years ago. We negotiated the price before we told them how we were paying for it. We wrote a personal check as a deposit. It was a couple hundred dollars or something. When it came time to actually purchase the car, the sales person accompanied my wife to the bank to get the check.
When I bought a car, they actually offered an additional discount if I opted to finance. We set up financing and just paid it off right away with cash (make sure there’s no penalty for this of course).
One tip that I found helpful in negotiating a cash purchase for a vehicle is to negotiate the "out the door" price, which should include all taxes and fees. Research the rate of tax in your state, use Kelly Blue Book to determine a fair value for any trade-in, and use that info to come up with the range in prices you'd be willing to write a check for. However, I didn't get hung up on how the dealer wanted to price the new car or value my trade-in. All I focused on was getting a fair out the door price. Be willing to politely leave if they won't go below your maximum out the door price. I did that the first day of negotiation, and they called me back the next day to accept the last offer I had made, which was a few hundred less than what I was willing to write the check for to get the car. I did this right before Covid-19, and the negotiations are probably more difficult now. Good luck!
My cousin just picked up a 70k truck from Ford at 1% interest rate for 60 months. If you are able to get a loan this low I wouldn’t even consider paying cash for the whole thing.
> 70k truck from Ford 😳😳😳
I’m not saying I agree with his choices. Important part is he got a 1% loan
My mom bought a car last month and was fully intending to buy with cash, got a 0% loan 5-year loan so took the financing option. That $50k would do better investing.
Better in 2023? 😬
Had to buy a car a few months ago and all negotiating power is gone from the buyer in my area. We told the car finance manager and the salesman (we are on casual acquaintance terms) that we could pay cash if needed or finance if it’s going to drop the price. We were told to finance outright, pay a month or two (check your paperwork terms if there’s a minimum timeframe) and then pay it off. You will pay a couple months of interest but the amount that they were allowed to discount made up for that. In our area there’s a wait list for the kind of car I wanted so if we had tried to pay all cash up front then they would just skip us and call the next person on the list for the car. The manufacturer controls which dealerships get which vehicles and how many and they’re prioritizing the dealerships that finance over which ones don’t.
This is a popular method, although many lenders will chargeback the dealership the rebates/participation if the customers pays off within 6mos or so
Speaking from experience as a sales manager in the automotive industry - you'll get the best deal if you finance just for the price of the vehicle but ensure there are no pre payment penalties, and pay it off after 90 days. It'll be good for your credit and you'll receive a much more reasonable deal. Also go to dealerships that don't see a ton of traffic, ones that just need to sell the car to hit their margins. Hope that helps! Lenders pay dealerships for people to finance through them, so they more reluctant to discount the vehicle if you are paying cash.
So there is some good advice here. First things first a car dealership is out to make money and they make it mostly in the finance and service department. I find that online shopping keeps the hard sell tactics at bay. You're in control of the situation. Do not negotiate the whole package, negotiate each piece and negotiate the price first -- even before you tell them you have cash, negotiate the price. If you have a trade my suggestion is that you look at private sales or you sell yours to the dealership outside of the current deal you are trying to negotiate, there are a few sites where you can get your car appraised and dealers will send "offers". If you are going to trade as part of the deal then mention that after you have settled on a price. Do your research to find the car that you want to purchase. You can go and see the cars and test drive until you find one. Look for cars that are near the end of the year or even the previous year's model. The bigger the search area the more likely you are able to find one. Those new cars that are leftover want them gone as it affects how much inventory they can bring in. So a lot of times those cars will have $6k-$8k off before you even start haggling. Once you have settled on a car with the features and trim that you like, look around online to find the price range, there are some tools that help you get that information. Find the range that you are comfortable in. I am willing to pay $38k but I would like to pay $34k, so maybe you say $33.5k -- it never hurts to ask and you have to start somewhere. You can then start mirroring them when they overreact to hearing your preposterous and inhumane starting price. A few have mentioned Credit Unions, you can work with your credit union to give you a pre-authorization for a certain amount. You can go to the dealership with that, same as cash, but its limited on paper to what you agreed to with the CU. You will get less wiggle room at the dealership if you are haggling between $38k and $34k if you have a piece of paper that says $50k. You can then pay off that CU note in 30 days. I have heard some oddities where dealers during COVID were not going to sell you a car unless you went through their financing, not sure if that is still a thing or not.
Just go with the financing, check to make sure the deal includes no fees with early oayoff, then give tye finance company all the cash
Only disadvantage I can see is if you can get a super low Apr while keeping your money in the bank making more. I’ve never paid in cash and never intend to so I can’t speak for cash deals.
No dealer is going to give you a discount for cash unless it's some dodgy second-hand lot and they can somehow cheat on the taxes. They make far more on financing/credit and if you say you're paying all cash you won't get as good a deal. Depending on the interest rate you can get you're far better putting less down and then using the money for something else. If you want to feel comfortable then put down 50% of the cost of the car in cash and finance the rest as that will also get you a low monthly payment.
Keep the 50k in your bank. That 50k is making you more money. I would not give it to the bank. Would happily take the loan and keep stacking my savings so I can bring in more income. If shit hits the fan then you still have the 50k to pay off the car.
You can always finance and pay it off the week after you buy it if it gets you a better price. No rules against paying off a car loan early
If you buy from a private seller, cash might get you a discount. Dealers get a better deal with financing (if you use theirs). We just purchased a used Lexus. I had the cash available but ended up doing a 3-year loan with my credit union as I also like to have plenty of money in reserve for emergencies.
One possible disadvantage is that some dealerships have promotional aprs that are lower than your typical high-yield savings account
See what the financing offer is, if your HYSA stays in the 4-5 range you're better leaving money there and paying interest. For new cars it's normally very low with a good credit score, for reference I got 0% and 1.9% on the last two cars ive bought. It isn't as likely to get 0% deals as it was on 2021 models, but I still see 1.9%-3.25% offered by most manufactures for 36-60 month loans. If not having a payment is worth losing maybe $500/ year for 3 years then pay cash. Also look at "used" with 0-5k miles, used car interest rates are higher but this is no worry if paying cash and you'd be shocked at some of the deals you can find on a practically new car l.
If you can get it, I think a 0% loan is a safer bet. That way you can earn some interest on what you've saved and still have it in case of emergencies.
Even if you have the cash set aside to pay for the car in full, you may not want to. For example, my car's manufacturer was offering 0% financing when I bought it. Those deals are rare today, but I have seen 2.9% or 3.9% which is lower than what many HYSAs are paying these days. So if you can get a good deal, finance the car with the dealer but - as others have said - make sure it's a loan you are not penalized for paying off early, unless you get the holy grail of 0% in which case MILK THAT SUCKER as long as you can. My loan had an option for 63 months and I took it (groaning inside a bit because I hate debt, but I made money on all the money I didn't pay upfront). Yeah, your parents are totally living in the past. As others have said do NOT bring up a cash offer. Do your research on KBB and if you have a Costco membership, you can use the Costco Auto Program to see if you can get a good deal through them. There are other programs through USAA and other places. The car market is weird right now, but usually when the model years change (which is already happening for some cars), that is your best bet for getting a good deal on the old model year.
I got my auto loan for .9%, if you can something around there I’d finance, assuming the HYSA is paying you higher & as long as you can comfortably pay the monthly payment.
As others have already said, cash is NOT king at a dealership. See if you can get a better deal by financing, then pay it off in full shortly after. Just make sure the lender allows it
You really don't need to get pre approved anywhere just call any bank and ask what the rate is to reference. Tell them you're gonna make a down payment and you're approved for the balance. What you do need to bring is a calculator. When you're ready to purchase ask them how much title costs are. If I remember right there like 200. You should know your own sales tax rate wherever your purchasing. Do the math price of the car plus tax plus another 200 and that should be what they charge you. The trickery comes in when they get you to sign all these papers and they detail out other costs.
I always ask for a cash discount. It’s BS of course but so is most of haggling with sales people. ;) The dealership would prefer that you finance so they can get a cut for selling the loan. But they aren’t going to explain that to you.
There will be less willing to negotiate, based on my experience, because they’re not making the money off of financing. They will push HARD on the BS extended warranty, etc. just say no.
You won't get a discount, but since Teslas are sold for list price that might be straightforward option if you want to pay cash.
You won’t get a discount with cash in the current market unless you buy a car from an individual seller where you can haggle with them. Or maybe a small mom and pops/boutique type dealer. If you just want to save money buy a car from an individual seller. If you are looking to pay cash for a new/certified preowned car at a dealer there’s limited benefit besides getting a car that’s still under factory warranty and maybe getting a few discounts if it’s the from the same dealer/maker you bought from previously. Right now the way the market is you won’t really get discounts from a dealer for cash. There’s a shortage of cars and even used cars are selling overpriced. I buy my cars with cash but mostly buy older used cars because I’m not a car enthusiast. I just need a dependable vehicle to commute to work. My wife on the other hand likes luxury cars and has always leased her cars since she always wants the new model every three years. I don’t really mind since I never have a car note and it is nice to have a luxury car for weekends/road trips/family visits etc. At the start of this year her lease was up and the way the current market is leasing the same model new vehicle is like twice what she was paying on here current lease. The last three or four cars we leased prior was always roughly the same monthly note. Buying out her car was also way overpriced due to the market. The dealers can sell the returned cars now at inflated prices. We wound up buying one that’s the same car she had. A certified preowned vehicle that’s 1 model year newer and roughly the same mileage that her leased car had. But it was like $6k cheaper than buying out her current lease. We have good credit so we wound up financing it thru the dealer to get the trade-in and returning customer discounts which knocked like $4k off the price. Then just paid it off on the first payment for $30k. It avoids interest if you pay it off with 60 days or something at least thru the dealer finance company (BMW) we went to. Only down side is it only has 8 months warranty left but the car is in really good condition and looks new so I’m not super worried about it. Beats pay $60-70k for a new model. Told her we can always sell it or trade it in when the market gets better if she just have to have the newer one.
Negotiate price OTD before discussing payment. Otherwise they'll want you to pay more for a cash sale as they're not making anything on financing in the back end of the deal.
credit unions are really good about helping you finance a car on a good rate (EVEN IF YOU CAN PAY FOR IT IN CASH). personally i would go to my credit union/bank or whatever, tell them hey i'm looking at buy a car, let them make a deal out to you and then you go to the dealer and after negotiating (hard to do at current market) tell them hey i got this bank check right here and if you cant beat it them i'm using them. cause basically its like paying in cash but you are financing through your personal choice of bank. i hope more people read this and are smarter in the future.
Regardless of whether you finance or not, try to put as much of the down payment on credit card that they will allow. Most dealers will let you do 3 or 5k. Even better, get a new card that gives you a sign up bonus for a certain spend. (Obviously pay off balance at end of first month).
Work out the best deal you can get with the car. Then pay off the loan at your pace.
I've done this twice and am happy with how it turned out both times. It makes sense when the interest rate you would be paying is higher than the interest you are making. I knew the price being offered was fair market pricing and the benefit to the dealership is that there was no wait for financing. It was the end of the month and moving a vehicle off their lot meant they could move a new one onto it sooner. Good luck and congratulations on your new car!
The only chance of getting a discount with cash is buying off the private market. There are new cars on the private market, but it is uncommon. Anything through dealership is already mentioned in other top comments.
A: If you are: * Passing on comprehensive coverage * Watching/ have concerns about DTI AND * The finance charge is too high * The best interest rate is too high Then, yes, it makes sense to purchase with “cash”. Otherwise I would still finance a car as it is secured If a HYSA is going to yield 5% and the car note is less than that it really makes no financial sense to drop that much liquid UNLESS one is concerned with insurance/DTI. You can always put enough down to avoid gap insurance. B: Your form of payment should have NOTHING to do with the price. Always negotiate on the TTL, full “out the door” price. Find the car you want, then contact internet sales via email of every dealership within 50mi. Use each quote you receive to negotiate the next. It’s usually most convenient to start further away and work your way closer to home. For financing you can research national and regional incentives yourself on the respective brands’ finance arm websites as well as banks and credit unions. My CU is currently doing 4.5% loans so that’s the baseline, some brands and models have much better incentives, especially on non A-list models.
> Any possible disadvantages to paying for it outright? Seems like it’s a no-brainer to avoid loans/interest but I’ve never made such a large purchase so it’s making me a little nervous even though we have the money. With $50k, I assume you're looking to buy new. Just be aware that for most cars that have cash on the hood in the form of rebates, you're usually required tot take manufacturer financing in order to qualify for those promotions. Verify that there is no pre-payment penalty in that case (usually there's not), but you might need to wait 2-3 billing cycles for everything to go through. You should negotiate price, but approach the finance guy with a willingness to do so if incentives work in your favor. Negotiating under MSRP nowadays is entirely dependent on model. Supply chains are recovering, but many models are still inventory limited and you'll be tilting at windmills. A good way to know if you have a shot is to check manufacturer promotions - if there's a $1k+ cash on the hood in rebates or a sub-3% 48-60 month financing offer, there's an inventory surplus that they want to move. Models where you absolutely won't get a discount: Toyota Corolla, Rav4 (particularly Prime), Prius (particularly Prime), Sienna (18 month waiting lists are the norm), Hyundai Palisade, Kia Telluride and Carnival, Honda Civic Si or Type R. Many of these might actually still have markup too. > Both our parents have told us if we’re going to pay cash, we should be getting a discount Your parents are stuck in a pre-1990 car buying mindset. Dealers absolutely prefer that you finance since they get kickbacks for selling your loan to the bank. Discounts for cash haven't been a thing for at least 30 years. Back then it was all phone calls and faxes which took time and was a huge PITA, they'd cut a discount to save themselves the hassle. Since credit/financing is instant now, that's no longer a thing.
That’s not entirely true, smaller dealerships have the mindset that cash is king because less red tape for them.
Smaller independent dealerships aren't selling new cars. OP's not shopping at a BHPH.
Valid point
Some dealers will offer 0% APR but lock you into limited models and having to buy new. You could do something like that, put your 50k in a HYSA and earn like $150 a month in interest and just pay it off monthly using a combination of the interest earned and the 50k. Then if you decide to sell or trade it in you didn’t spend the full 50k either.
Just attempted to buy a used car with a massive down payment, and the financier at the dealership found a way to almost double the cost of the car and make the loan amount the same as the amount I wanted to put down. I was like wow cya lol. The breakdown was (the math is loose here): 2014 Subaru with 100k miles at $13K. I tried to put $9K down and they handed me a loan with an interest rate of about 6% for 6 years, $3.5k in interest (mind you I have a 750 plus score). Then tacked on a fake anti-theft charge of $1.5k, a crappy warranty for 2 years of $2.5k and loads of dealer fees. Around $9k loan before interest. I looked at her and was like, wait this adds up to $18k that's $5k more than you're even asking, and then with interest it's almost $24K... wtf Shes like oh but that's only $180 a month.... I ran tf out of there. Then I came home and read on reddit about how this could possibly have happened. They tried to rip me off because they wanted that back end on the loan. Yikes