Buying a Car: Paying Cash

[BrooklineBiker]

I'm looking to buy a used car from a dealer and plan to pay cash.

What should I expect in my interactions with a dealer?

Does paying cash create any possibilities for discounting?

Am I at a disadvantage if I tell the dealer I plan to pay cash?

[Syonyk]

What should I expect in my interactions with a dealer?

A well refined, polished screwjob that leads to you paying more than you ever thought possible without quite grasping what's going on.  It's their job to be good at it.  Most ar.

Does paying cash create any possibilities for discounting?

No.  Most of them get kickbacks for financing, so they're earning less if you pay cash.  Most will be pretty well irritated at you, those spiffs are important parts of their income.

Am I at a disadvantage if I tell the dealer I plan to pay cash?

Yes.  Hold that close until the very end.

Unless it's like a $2000 car or something, they don't seem to care much about then and are happy to be rid of it for minimum hassle.  I put a car on a credit card some years back.

[chasingsnow]

Would be curious on why you are choosing to go to a dealer? If you have the ability to pay cash you will get a much better deal on the private market and the room to negotiate is much larger.

[nereo]

Am I at a disadvantage if I tell the dealer I plan to pay cash?

Yes.  Hold that close until the very end.

Unless it's like a $2000 car or something, they don't seem to care much about then and are happy to be rid of it for minimum hassle.  I put a car on a credit card some years back.

Agreed.
My last car purchase i spent hours with the sales guy who kept saying he could do this or that with the financing to give me a insanely low monthly payment. I smiled ad nodded ad then went back to what the price could be.  He kept the “ill have to run it upstairs” before returning with another *monthly payment number.  I asked what that would be for the purchase price.  Finally got a firm number, which seemed fair.  Said yes to number.  Went on to the financing department where they first tried to get me to sign the monthly payment, until i insisted i have the full documents in front of me to read.  Eventually they relented. Then i handed over the check and they tried to rescind the deal, until my then gf (a lawyer) pointed to the offer in writing in front of me.

Bottom line, they can earn more through financing tha on the margin of the sale. Many dealerships make more money through financing than service, and selling the actual car is the least profitable of the three.

Get the price before saying you can pay cash. If you need to take the financing with a no prepayment penalty and then pay it off within 30 days. But they wat you to finance

[GilesMM]

They normally make a ton of money on used cars because they give people so little on trade-in or purchase them at auction. So, negotiate a huge discount off sticker.  Then tell them it will be cash. They won't care.  If you like airline points, put it on your credit card. That is how I bought my last Lexus.

[chemistk]

They normally make a ton of money on used cars because they give people so little on trade-in or purchase them at auction. So, negotiate a huge discount off sticker.  Then tell them it will be cash. They won't care.  If you like airline points, put it on your credit card. That is how I bought my last Lexus.

Have you seen the used car market over the past 2.5 years? There is almost zero room for negotiation right now, and if there is, it's almost always a couple hundred bucks - that usually comes with the need for understanding where you can press on a car. I got a few hundred off my current car some years ago at a dealer because I correctly identified that it was a former rental, and that most people would give pause when buying one. He didn't believe me until he pulled up the documentation and saw that I was right. When we bought my wife's van at a dealer, we got a couple hundred off because I pointed out that it had been sitting too long (all the power doors were dead) - also got a free battery.

 I pass ~6 dealers on my commute, and each of them is still low on inventory vs. what their lot would have looked like in mid-2019.

Would be curious on why you are choosing to go to a dealer? If you have the ability to pay cash you will get a much better deal on the private market and the room to negotiate is much larger.

I'll heartily echo this - you'll need to do a bit more tire kicking and the process will take a couple more days, but if you've got cash then you're going to be getting a much much better deal buying private party. Be up front with the sellers that you want a pre-purchase inspection, but also let them know that you're willing to accommodate their schedules. A friendly transaction will give you more negotiating room than you'd ever get with a used car dealer right now.

[economista]

In 2020 I bought a car with cash from car max and there were absolutely no issues at all. Nothing like I’ve read about buying cars with cash at dealers, no pressure to finance, nothing. Just “Ok, great” and then I wrote them a check.

[SweatingInAR]

Would be curious on why you are choosing to go to a dealer? If you have the ability to pay cash you will get a much better deal on the private market and the room to negotiate is much larger.

I'll heartily echo this - you'll need to do a bit more tire kicking and the process will take a couple more days, but if you've got cash then you're going to be getting a much much better deal buying private party. Be up front with the sellers that you want a pre-purchase inspection, but also let them know that you're willing to accommodate their schedules. A friendly transaction will give you more negotiating room than you'd ever get with a used car dealer right now.

Please consider private party!
Individual sellers are typically going to be more honest than a dealer salesperson. Not every individual on facebook marketplace or craigslist is trained to sell. Salespeople are. There's a great book about sales tactics that scared me off from ever buying a used car from a dealer:
http://dontgettakeneverytime.com/

I don't know where you are, but private party car sales are exempt from sales tax in some parts of the United States!

[Rosy]

The dealers here in Florida are well used to cash transactions, we have lots of well-to-do boomers along with the jet set of the rich or famous. Fixed prices are everywhere incl. the Subaru dealership that Mr. R. went to - he was considering cash for a used car but the zero percent loan on a brand-new car was simply too good to pass up.

I bought my last car in 2017 from a nearby "wholesale buyer lot" that sells to the public, apparently, people from all over the country come to buy from there. The sticker price was at least $4K below the blue book, with no negotiation or pressure.

Bought mine at a 2% loan and a week later bought my son's outright with cash, no change in price and no problem. Neither car has had any issues since its purchase.
We got a carfax prior to purchase and mine showed a recall that was easily fixed at a dealership at zero expense.

Good private deals are not that easy to find, people either turn over their leased car back to the dealership or are concerned about fraud and prefer to sell hassle-free to places like Carmax.
The "over 55" crowd tends to sell to each other and the good deals seldom leave the condo complex or even the trailer park:).   

I don't drive much anymore and the one person that owned my car before only put 10,000 miles on it.
My 2014 Buick just went over 20,000 miles this year.
Whereas Mr. R. puts 50-60 miles commute to work on his Subaru. We'll probably sell his car when he retires and just keep the low-mileage ole Buick.
We're not car people -
but if I ever won the lottery I'd buy a cherry red Mercedes Sport even if I were a 100 - one can always engage a chauffeur, n'est pas:). 

[GilesMM]

Have you seen the used car market over the past 2.5 years? There is almost zero room for negotiation right now, ...

I have seen it quite well and used car sales parties (both private and retail) build in PLENTY of excess in their asking prices.  Why wouldn't they?  This leaves plenty of room to negotiate downward if you know what you are doing.  You have nothing to lose!

[Gronnie]

Have you seen the used car market over the past 2.5 years? There is almost zero room for negotiation right now, ...

I have seen it quite well and used car sales parties (both private and retail) build in PLENTY of excess in their asking prices.  Why wouldn't they?  This leaves plenty of room to negotiate downward if you know what you are doing.  You have nothing to lose!

The point is that there's not enough cars to satisfy demand. Just because they could still make money giving you a discount doesn't mean they will. Why would they when there are more people buying than supply (thus the high prices)?

[chemistk]

PTF. Looking to buy a car and pay cash ($20k all in) but can't find good private party deals and seems that online or in person dealerships might be the way to go. Curious if anyone has details on the best way to go -  online vs. dealers (wholesale, used or New dealers)?

It really depends on what you're looking for, how much negotiation you're willing to put up with, and whether you're willing to finance (even if it's only for a month).

To the first point, dealers know that the market is especially hot in a few categories: trucks, fuel efficient cars, electric cars, and off-roaders. If you're shopping in any of these categories, you're really going to need to do research ahead of time (KBB, NADA, cross-shopping other regions online), because whether you're buying in person or online, prices tend to be higher in these categories.

To the second, the absolute best benefit for buying online (or from Carmax) comes from the fact that the price you see is more or less the price you'll pay. The downside to that is unless you're looking for a dime-a-dozen small to midsize crossover, the prices at Carvana/Carmax are going to be a bit higher than what you would expect based on private party listings or blue book values. If you have the time and willpower, there is usually a deal to be had if you look carefully enough and are willing to not only just negotiate but also to walk away from negotiations with a dealer. You won't be getting a screaming deal but it's definitely possible to get lower than Carmax, just with added hassle. When I found our van, it was sitting on the lot at a Chevy dealership that heavily favored sales of trucks and fullsize SUV's. Nobody browsing the lot in that demographic would have had any interest in a Honda minivan and so it sat undriven for a couple months. Had it been at a typical lot or a Honda lot it would have been sold within a week of listing.

To the third point, if you do happen to find yourself working with a dealership, as was mentioned upthread you're going to have a much better shot at a discount if you finance and especially if you finance with a bank that the dealership chooses. You can absolutely make sure that the loan terms enable you to pay off the loan within a month, but because the dealerships get incentives from the bank to sell financing, they're much more motivated to wheel and deal if you're opening that option for them.

FWIW, my parents have used Carvana twice and have mostly been very satisfied with the service, but they also paid ~$1500 over what they might have been able to get by shopping in person.

[GilesMM]

PTF. Looking to buy a car and pay cash ($20k all in) but can't find good private party deals and seems that online or in person dealerships might be the way to go. Curious if anyone has details on the best way to go -  online vs. dealers (wholesale, used or New dealers)?

What is your definition of "good private party deals"?  Can't find the car you seek or don't like the price?   I like to use Carfax.com to calibrate prices for condition but it only works if the car has enough sales to generate meaningful data. If you are looking for something rare it is less reliable.   Carfax car history data, of course, is great to look at on all deals as well, private or otherwise.  Insist the seller provide the report.

I would search online using Craigslist and FB Marketplace and Carfax. Go wider distance-wise if needed and don't be afraid to travel if needed to find the car you want.  That's what it takes these days in some cases.  Private party is less common than before because it has become so easy for sellers to send their cars to Carvana et al for quick sale.    If you can't make private party work, then go via dealers but gird your loins for shady behavior.  Best case is when they have an off-brand trade-in they want to flip quickly, e,g. a GM dealer selling a Toyota. These are normally listed online and you can see how long they have been listed.  The longer they have been listed the more price flex you can expect.

You have picked a truly awful buyers market to purchase a car. Good luck!

[GilesMM]

Used cars are currently sitting at 200% of their normal and vans are the worst (highest increase). Not a great time to buy.  Tradesman tend to snatch up all the cargo vans since the service market has been overheated for a while.

If you are determined, I would look at Toyota Sienna minivans with just over 100,000 miles. 

Here's an example https://www.carfax.com/vehicle/5TDYK3DC4ES411778

[GilesMM]

If you just need it for a the odd road trip I would definitely be renting instead. Plenty of Socal rentals on Turo under $30/day.  Even if you blew, say, $2-3000/year on rentals you would be way ahead of the initial $20,000 cash outlay plus taxes, annual registration, tires, brakes, insurance and repairs.  Not to mention the headache of owning, parking, etc.   If you want to combine flying and driving, renting works great for that also.

 If you don't need it, don't buy it. 

[BrooklineBiker]

Hi folks,
 
Please keep the focus of this thread on how to deal with dealers when paying cash.

I'm still seeking advice on that.

[Tester]

How I go about buying cars:
Look online.
Find car I think I want at price I am ok with.
Email dealer for out of door price. No out of door price I don't go to see the car.
Go see the car, test it.
Buy it - for one I said I forgot my checks home but I can pay a small amount as downpayment until next day (this discussion with the sales person), got to the finance guy and when he asked how I pay I said I have a credit card, he swiped it for the whole 9k of the car....


You can either ask for the out of door price in the email and specify you are paying cash or just tell that at the end.


With the above I never have to haggle because for me the price is "right".
I know that mean that in theory I am paying "more" but this is how I do things.
One more thing: after you say you want to buy they will still try adding things like warranty, theft tracking stuff, paint treatment, etc. For those be prepared to say no several times and read the final price as they might still be added. And be prepared to leave without the car. Even in this seller market I would leave.

[iris lily]

I'm looking to buy a used car from a dealer and plan to pay cash.

What should I expect in my interactions with a dealer?

Does paying cash create any possibilities for discounting?

Am I at a disadvantage if I tell the dealer I plan to pay cash?

We have always paid cash for cars. The last car we purchased earned us an upsell attempt from the “ credit manager “who tried to talk us into financing the car so that we could “take a nice vacation instead.”

This was after our car salesman had made some crack about people paying cash, and he laughed sheepishly when we revealed yes, we would be paying cash.

Buddy, I can buy three of these cars and take three nice vacations just based on the cash that’s in my checking account today. (Don’t tell me how it is bad to keep that much money in cash, I just do.)

We have, in the past, purchased a few cars from our friend who has as his clientele rich old people. He doesn’t blink at people paying cash, nor does he rudely imply you cannot afford it. He is an excellent car salesman who’s been in the business for 40 years, and his MO is providing stellar service. In one car buying effort from him we were busy working and didn’t have time to run around and find good used cars, so we just ordered new ones. He drove across state lines a couple times to deliver paperwork to us for a signature. That’s how he earns loyalty from his customers.

Once we were at a party at his house, the year we had purchased two new vehicles from him with cash, and there was another guy there who had also purchased two new cars with cash only our cars together totaled about half of just ONE of his cars.

[iris lily]

Sorry my last post rambled a bit.

As for buying a used car with cash: this happened in 2019 so I’m not sure that this pre-pandemic experience carries over to now.

I went to a dealer who has fixed prices for used cars. At least he told me they have a fixed price. I think it’s pretty common if they do this now, and they said they set a price and the car sits, and the price is reduced at regular intervals until it sells.

I didn’t really care about the price of my used car so it didn’t matter and I didn’t attempt to challenge that. But as I said, that was in 2019 before the crazy pandemic and supply chain shortages hit.

[chemistk]

Hi folks,
 
Please keep the focus of this thread on how to deal with dealers when paying cash.

I'm still seeking advice on that.

It was already laid out pretty clearly by @Syonyk - you are at a disadvantage by paying cash. The only real upside in the eyes of the dealer, is that there's no worry about your credit being so bad that you can't qualify for a loan, but being a cash buyer it's easy for you to walk away, so in their eyes you're still a potential waste of time and a guaranteed loss of a kickback from the lender.

You might hear a story or two about how someone 'got a great deal' or was at an advantage by paying cash, but those are highly situational and if you ever leave a dealership feeling smug that you pulled the wool over the salesman's eyes, then it's you who has been had. Barring those anecdotes, your experience is going to be pretty vanilla.

Perhaps you could be more specific about what you're trying to purchase, and the amount of time and effort you're seeking to invest in the transaction.

[GilesMM]

It was already laid out pretty clearly by @Syonyk - you are at a disadvantage by paying cash....

You are only at a possible disadvantage in the used car market if you tip your hand early.  Instead, tell them you haven't decided how you are paying and would love to hear their financing options.  THEN agree a final price, try to get them to sign a contract at that price and tell them you will figure out the rest with the finance department.  If they offer you a great interest rate, finance it.  If not, either pay cash or finance it and pay it off the first month.

But keep in mind used cars are different from new cars. There are many, many used car sellers who want cash.  They are not large dealerships but small time used car sellers or individuals on CL or FBMP.  They will give you a great deal if you can hand them the cash today.  Go bargain with them for a deal.   

I shopped for a tractor earlier this year and tracked a very tight used market for months with little success in finding the right deal.  When I did, I showed up with an envelope of cash, inspected and negotiated.  I paid full price (which was actually a very good price and why I didn't try to push my luck) but got the seller to throw in a $2,000 implement for free and deliver it all to my place 20 miles away that day.

[chemistk]

It was already laid out pretty clearly by @Syonyk - you are at a disadvantage by paying cash....

You are only at a possible disadvantage in the used car market if you tip your hand early.  Instead, tell them you haven't decided how you are paying and would love to hear their financing options.  THEN agree a final price, try to get them to sign a contract at that price and tell them you will figure out the rest with the finance department.  If they offer you a great interest rate, finance it.  If not, either pay cash or finance it and pay it off the first month.

But keep in mind used cars are different from new cars. There are many, many used car sellers who want cash.  They are not large dealerships but small time used car sellers or individuals on CL or FBMP.  They will give you a great deal if you can hand them the cash today.  Go bargain with them for a deal.   

I shopped for a tractor earlier this year and tracked a very tight used market for months with little success in finding the right deal.  When I did, I showed up with an envelope of cash, inspected and negotiated.  I paid full price (which was actually a very good price and why I didn't try to push my luck) but got the seller to throw in a $2,000 implement for free and deliver it all to my place 20 miles away that day.

I completely agree with you, but I'm assuming OP is looking to buy from a 'traditional' dealership (used only or new+used, who knows?) and to that end, you can only get so far into the transaction before telling them "no, I don't want you to run my credit".

In fact, when we bought our van a couple years ago, one of the first questions the salesperson asked was how we planned on paying. It wasn't a dealbreaker for me to withhold that information (we did finance), but it was definitely front of mind for the guy.