Author Topic: Tips wanted on used car buying when paying in cash  (Read 8731 times)

SomedayStache

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Tips wanted on used car buying when paying in cash
« on: July 22, 2014, 12:47:34 PM »
We have cash to buy a used car and have seen a few promising leads.  If we are shopping at a dealer should we hide the fact that we will be buying in cash?  Is it possible to put this purchase on a credit card to earn rewards? Since dealerships make money on financing has anyone bargained the price down by agreeing to finance, but then just paid the loan off the next day?

The other two times the hubs and I have set foot in a car dealership we've bought a car that day.  We're not neccessarily suckas...but I want to be better prepared this time round.

Joggernot

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Re: Tips wanted on used car buying when paying in cash
« Reply #1 on: July 22, 2014, 05:22:02 PM »
I put my motorcycle on a cc for the rewards (lots of them).  The dealer looked at my in a funny way, but said they'd "run it".  Surprised them when it was approved.  :)

SomedayStache

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Re: Tips wanted on used car buying when paying in cash
« Reply #2 on: July 22, 2014, 07:31:06 PM »
They probably thought you were an idiot for paying credit card interest rates instead of financing with them.  Little do they know.

bluecollarmusician

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Re: Tips wanted on used car buying when paying in cash
« Reply #3 on: July 22, 2014, 07:36:56 PM »
I have never bought from a dealer (except once), so maybe someone who has sold cars will have better intel... but my gut tells me that you should be able to get it for less cash than if you want to put it on a credit card- they pay a transaction of probably 3% or so, and you should be able to get that discounted.  If not, put it on the card for sure. 

Negotiating down with financing, then paying cash may be an idea.  In my experience- know a fair price before you walk in the door.  No matter what they want to charge, stick to that price.  I bet they will agree before you walk out the door.  I had a theory about that and my best friend used that exact tactic the last time he bought a car.  He had his number in mind before he even walked in the door, significantly below the number he was quoted on the car.  He didn't haggle really, just told the dealer he had done his homework and that his offer was a fair price.  They said they could never do it- he leaves, and then they call him and say they can do it.....

Joggernot

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Re: Tips wanted on used car buying when paying in cash
« Reply #4 on: July 22, 2014, 07:42:04 PM »
They probably thought you were an idiot for paying credit card interest rates instead of financing with them.  Little do they know.
Yep, paid off when the bill came.  So it was a win-win; me because I get the rewards; them because it gets paid for.

Chuck

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Re: Tips wanted on used car buying when paying in cash
« Reply #5 on: July 22, 2014, 08:36:58 PM »
First, find several vehicles that interest you online, and print out he kelly blue book values. Put them in a folder, along with the complete service records of the car you will be trading in. Then detail your trade in. Wash, wax, vacuum, armor-all, the works. Make that car look like something that you won't be afraid to drive away in if the dealer won't cave. (Chances are you might have to, so worst case scenario, now you have a very clean car!)

Do not, ever, go to a dealership and declare that you have a specific used car in mind (even though you absolutely should!) When they ask how much you are there to spend, be noncommittal. Look at cars randomly, allowing the salesperson to make their pitch, and only show interest in the car you want after the dealer tries to pitch it. In a negotiation, the person with the most information has the most power, so keep all the pertinent facts to yourself until absolutely necessary. That does not mean that you should be impolite or unfriendly. Just aloof, or at best distracted.

After you've shown interest, take a test drive with the dealer in the passenger seat. At this point, do your best impression of an impossible to please, entitled brat. Seriously. I want you to bitch about EVERY. SINGLE. THING that is not absolutely perfect with that car. Dings and dents? Loudly note them. Trans revs hard between third and fourth? Loudly note it. A/C is weak? Loudly note it. These things are your poker chips, and you're going to play them to great effect later on when you start arguing numbers.

After the drive, at which point there should be serious doubt in the dealer's mind if you're even going to buy it at all, you'll go inside and he'll give you two numbers. One for his car and one for yours.

Unless you buying a new car (FACEPUNCH!!!) both of the numbers he gives you will be complete horse shit. Be prepared with that KBB sheet that you printed off earlier. Point out, politely but firmly, what the fair value of the car would be if it was in good condition. Then point out that this particular car is a long way from good. You should then pivot, and point out that the value of your vehicle is significantly higher than the offer, both because fair value for good car is higher per KBB and because your meticulously maintained vehicle is significantly better maintained than an average "good" car.

At this point the dealer, if they are seasoned, will realize they are milking a stone and one of two things will happen: They will pretend to be in a huff, and disengage. This is because they are fairly certain they can sell the car for more later. Or, and this is the more likely result, they will say something like "what's it going to take here..." That is when you reveal that you want to be out the door for "$XXXX" and only if Y and Z service are added as a WE OWE on the vehicle. That $XXXX is a variable number. You should have a maximum you will not go over, determined before you even get there, but if the negotiation goes well you should push for more. You're likely to get it.

Goldielocks

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Re: Tips wanted on used car buying when paying in cash
« Reply #6 on: July 22, 2014, 08:53:33 PM »
The last post was good.

Two things I learned accidentally, mainly by reading faces during a transaction.

1 mention paying in cash is not great up front.. They want the finance profit too.  Some used places are ONLY interested in the finance money.

2 after haggling for a short time, while insisting that their four square sheet is confusing you, could they please and pretty please just write it as a cash number?  Then bring out your $200 deposit cash, and say again that you really want to buy a car today, but their numbers are not working for you.

3 (bonus tip)
Oh yeah and be ready to stand up and go for any reason, like they take too long discussing your offer with the manager.

Lastly, if you have cash you can buy from a private seller as most people need financing so you can get a much better deal.  They usually want to sell it faster too.

captainawesome

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Re: Tips wanted on used car buying when paying in cash
« Reply #7 on: July 23, 2014, 06:21:53 AM »
Generally most dealerships won't let you put more than a certain amount on a CC.  That number can vary, but assuming you are buying something in the 7-10k range, they most likely will not.

Having bought many a car in my day (not proud of it, but I do have a bit of experience) and having done the new and used route, as well as financed and cash route I would say this:
If you see a car that matches your needs, don't get excited over the buy.  Be prepared to walk away. Pictures online have a funny way of making a car look better than it is. Know that there are other cars out there. With that said, here are some things that have already been covered to an extent.

Depending on the dealership, they may not want to haggle, or like Carmax, may have no haggling pricing. Personally I think dealerships (and Carmax specifically) are a little high for what you really get with the vehicle, and can do much better looking around and doing your due diligence.  If you are looking for an honda for example, search around.  Sometimes luxury dealerships will get trade ins that they will put on their lot, but not really have any interest in selling too quickly and may negotiate just to get rid of it.  I would say the same holds true if you were to buy a mazda at a toyota dealership, etc.  Overall though, I would still recommend searching the private sales first. Most people want money as soon as they can, and if they can get more than a trade in, they'll take it.

If you have a price in your mind that you want to pay, and if it doesn't meet that, walk away.  If the dealership wants to do the deal, they will do it.  Sales guys don't want you to leave. 

Be prepared to dodge the extended warranties, paint protections, interior protections etc. All but one dealership in my life has tried to sell me on that. 

My most recent car purchase was cash from a dealership. It was a dealership that my family and I had been using for a few years and we knew the salesman. I told him I wanted x car and wanted to pay cash for it. Because of the car's condition and mileage, there wasn't room for negotiating.  I accepted that fact, and told them I still wanted it.  Since I was coming in from out of town, they were nice enough to not only draw up all  the paperwork, but also deliver the car to my parents place where I was staying.  I signed the paperwork, gave them the check, shook hands, and that was that. It was actually easier than buying from a private party (which can be a PITA if they don't have the title in hand) but I figure those relationships are few and far between. 

Good luck with the sale, and remember, you have the upperhand. Most people walking into the dealerships these days have sucker stamped on their forehead, and will gladly accept a car payment for a shiny toy.  Knowing that you are paying cash, and that is all the money you are willing to spend makes you more hesitant to make an impulse buy, and ensures you get exactly what you want. 

frugaliknowit

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Re: Tips wanted on used car buying when paying in cash
« Reply #8 on: July 23, 2014, 08:26:31 AM »
I probably would not tell the dealer how I was paying on the front end.  They might in fact prefer to do a loan.  If they asked me, I might say "I have great credit!".  This will get them salivating.  Then, once a price is agreed upon, say, "How much less for cash?".

You don't say whether you need to sell a vehicle...?  If you are interested in a trade, do not mention this on the front end.  Make it appear you are only buying.   Then, once you are happy with a purchase proposal, ask what they will pay you for the car you want to sell.  This will make everything transparent and prevents them from confusing you with smoke and mirrors (inflating the price of the trade, while inflating the price of the purchase).

Of course, best that you sell and buy privately.  Private deals should be done at the buyer's bank to avoid any fraud and make everyone comfortable.  Also, make sure you have a good mechanic lined up to check the purchase and make sure that is written into your contract.

eostache

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Re: Tips wanted on used car buying when paying in cash
« Reply #9 on: July 23, 2014, 08:47:24 AM »
When I bought my Subaru, $4600, almost 7 years ago, it was a private sale from some folks I sort of knew. I wrote them a personal check. It was all good. The lesson on that one was to keep your eyes open and cash on hand ready to buy. I was the first one to look at it and I had to decide fast because it wasn't going to last long. (It was a great deal.)

A few years later my bf bought an older Toyota truck at a dealership. We decided on an out the door price (~$7000) and went to the bank and got a bank check made out to my bf's name (he was buying the truck for himself). I have a Visa cc with a stupid high credit limit. I called my Visa and pre-approved a possible $7000 charge on it. When we went to the dealer to pay we kept the bank check in our pocket and I set out my Visa and asked if they take plastic. The dealer only blinked slightly and ran the card. If they didn't take the Visa we would have endorsed the bank check and payed to the dealer. On the way home with the truck we stopped by the bank and payed the Visa charge off with the bank check. The payment actually posted on the Visa before the charge went through.

Forcus

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Re: Tips wanted on used car buying when paying in cash
« Reply #10 on: July 23, 2014, 10:33:39 AM »
Only thing to add is I still haven't figured out what motivates dealerships, cash, credit cards, or financing. My gut feel is that the medium to larger ones prefer financing, they know they can get the average customer to pay a fairly high interest rate and get a kick back from the bank for it. I saw one of the sheets once and the kick backs were $1500 or more depending on rate and term. Smaller places may not have these sheets and so it's just an added step for them to finance. I've seen some of these smaller places advertise a cash price that is cheaper. I don't think ANY of them prefer CC's, as they get charged up to 3% or so. The last car I bought, they limited CC's to something like $3500 each.

I don't know if it's the best approach but I've always been noncommital when talking cash or financing and just worked the price down to what I want and then talk about it. For a medium to larger dealership it might be better to talk as if it will be financed. Heck it might even be worth financing. If it could knock $500 or more off because they will get a $1500 kickback, and there are no financing fees or early payment penalties, the only loser is the bank.

Just my $.02.

SpicyMcHaggus

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Re: Tips wanted on used car buying when paying in cash
« Reply #11 on: July 23, 2014, 12:00:05 PM »
We have cash to buy a used car and have seen a few promising leads.  If we are shopping at a dealer should we hide the fact that we will be buying in cash?  Is it possible to put this purchase on a credit card to earn rewards? Since dealerships make money on financing has anyone bargained the price down by agreeing to finance, but then just paid the loan off the next day?

The other two times the hubs and I have set foot in a car dealership we've bought a car that day.  We're not neccessarily suckas...but I want to be better prepared this time round.

In regard to your specific questions:
1) yes, it is possible
2) yes, i have used dealer financing to drop the price and then refi'd a week after.
3) try this: first agree on a cash price. then advise you want to pay by credit. they are not legally allowed to change the price according to their contract with visa/mc. then if your rewards are 1%, and they are paying a 3% fee, simply offer a compromise, that they lower the price another 1.5-2% and you will pay cash that day.

If they are more interested in financing you, you can take the finance deal, and then pay that off with your CC.

Beric01

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Re: Tips wanted on used car buying when paying in cash
« Reply #12 on: July 23, 2014, 12:51:35 PM »
Is there a reason you're buying from a used car dealer? Way cheaper to buy from a private seller - just get a local mechanic to check out the car before you plunk over the cash and you can save yourself several grand.

Christiana

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Re: Tips wanted on used car buying when paying in cash
« Reply #13 on: July 23, 2014, 01:41:46 PM »
When we did this, my husband negotiated based on the out-the-door price.  It may have helped that it was the afternoon of December 31.

If you're going to pay with physical cash that you need to get from your bank, tell the bank ahead of time--most of them don't keep much cash on hand these days.

frugalnacho

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Re: Tips wanted on used car buying when paying in cash
« Reply #14 on: July 23, 2014, 01:52:14 PM »
They probably thought you were an idiot for paying credit card interest rates instead of financing with them.  Little do they know.
Yep, paid off when the bill came.  So it was a win-win; me because I get the rewards; them because it gets paid for.

Except they probably had to pay far out the ass for the credit card fees, so they instantly lost about 1%.  It's a win-win for you and the cc company, but not dealership.  Unless you count the fact they had a sale as a win (even though they had to pay the cc fees).

SpicyMcHaggus

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Re: Tips wanted on used car buying when paying in cash
« Reply #15 on: July 23, 2014, 02:37:28 PM »
Is there a reason you're buying from a used car dealer? Way cheaper to buy from a private seller - just get a local mechanic to check out the car before you plunk over the cash and you can save yourself several grand.

also this. unless you are purchasing a vehicle that can't be found privately, or you are getting a CPO (but most mustachian cars are so reliable that CPO is a waste of money), then you would financially save thousands going to a private party seller.

Cassie

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Re: Tips wanted on used car buying when paying in cash
« Reply #16 on: July 23, 2014, 03:39:19 PM »
I had a friend that bought a $60,000 condo on her credit card for the rewards.  She of course paid it off in full when she got the bill.  About 6 months ago we wanted to buy a Honda Accord that was used & I found one online at a dealer that was listed below KBB.  I actually think they could not sell it because the inside color was gold.

charles_roberts

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Re: Tips wanted on used car buying when paying in cash
« Reply #17 on: July 29, 2014, 09:12:46 AM »
The last post was good.

Two things I learned accidentally, mainly by reading faces during a transaction.

1 mention paying in cash is not great up front.. They want the finance profit too.  Some used places are ONLY interested in the finance money.

2 after haggling for a short time, while insisting that their four square sheet is confusing you, could they please and pretty please just write it as a cash number?  Then bring out your $200 deposit cash, and say again that you really want to buy a car today, but their numbers are not working for you.

3 (bonus tip)
Oh yeah and be ready to stand up and go for any reason, like they take too long discussing your offer with the manager.

Lastly, if you have cash you can buy from a private seller as most people need financing so you can get a much better deal.  They usually want to sell it faster too.

Great tips! The bonus tip especially can be a life saver and also a great fear of loss tactic if they think you are going to leave and they are missing out on a sale. But agreed with a lot of others that have commented on this - be upfront about how you want to pay but don't be afraid to haggle (or tell them a small number than you actually have in your pocket!)

With a used car though I would also highly recommend a VIN check just on a separate note, CARFAX do a free lemon check http://www.lemoncheck.com/ - just always worth doing with a used car and especially one you've paid for in cash as if it IS a lemon there is far less of a paper trail if you need to return it..

Good luck!
« Last Edit: July 29, 2014, 09:30:00 AM by charles_roberts »

defenestrate

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Re: Tips wanted on used car buying when paying in cash
« Reply #18 on: July 29, 2014, 02:57:02 PM »
First, find several vehicles that interest you online, and print out he kelly blue book values. Put them in a folder, along with the complete service records of the car you will be trading in. Then detail your trade in. Wash, wax, vacuum, armor-all, the works. Make that car look like something that you won't be afraid to drive away in if the dealer won't cave. (Chances are you might have to, so worst case scenario, now you have a very clean car!)

Do not, ever, go to a dealership and declare that you have a specific used car in mind (even though you absolutely should!) When they ask how much you are there to spend, be noncommittal. Look at cars randomly, allowing the salesperson to make their pitch, and only show interest in the car you want after the dealer tries to pitch it. In a negotiation, the person with the most information has the most power, so keep all the pertinent facts to yourself until absolutely necessary. That does not mean that you should be impolite or unfriendly. Just aloof, or at best distracted.

After you've shown interest, take a test drive with the dealer in the passenger seat. At this point, do your best impression of an impossible to please, entitled brat. Seriously. I want you to bitch about EVERY. SINGLE. THING that is not absolutely perfect with that car. Dings and dents? Loudly note them. Trans revs hard between third and fourth? Loudly note it. A/C is weak? Loudly note it. These things are your poker chips, and you're going to play them to great effect later on when you start arguing numbers.

After the drive, at which point there should be serious doubt in the dealer's mind if you're even going to buy it at all, you'll go inside and he'll give you two numbers. One for his car and one for yours.

Unless you buying a new car (FACEPUNCH!!!) both of the numbers he gives you will be complete horse shit. Be prepared with that KBB sheet that you printed off earlier. Point out, politely but firmly, what the fair value of the car would be if it was in good condition. Then point out that this particular car is a long way from good. You should then pivot, and point out that the value of your vehicle is significantly higher than the offer, both because fair value for good car is higher per KBB and because your meticulously maintained vehicle is significantly better maintained than an average "good" car.

At this point the dealer, if they are seasoned, will realize they are milking a stone and one of two things will happen: They will pretend to be in a huff, and disengage. This is because they are fairly certain they can sell the car for more later. Or, and this is the more likely result, they will say something like "what's it going to take here..." That is when you reveal that you want to be out the door for "$XXXX" and only if Y and Z service are added as a WE OWE on the vehicle. That $XXXX is a variable number. You should have a maximum you will not go over, determined before you even get there, but if the negotiation goes well you should push for more. You're likely to get it.

I do not agree with this. Make the transaction time as short as possible. Know exactly what you want, and exactly what you are ready to pay. Find several places that sell the car you want and know the value. If you are ready to walk away without a deal, and you know your reservation price. Do not negotiate...place your offer on the table, when it is refused, simply walk away and go to their competitor. Most people want to make money, and think of their hourly rate. If they can make a couple hundred dollars off of you quickly, they would rather do that then pass it up.

Spork

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Re: Tips wanted on used car buying when paying in cash
« Reply #19 on: July 29, 2014, 03:20:51 PM »

I do not agree with this. Make the transaction time as short as possible. Know exactly what you want, and exactly what you are ready to pay. Find several places that sell the car you want and know the value. If you are ready to walk away without a deal, and you know your reservation price. Do not negotiate...place your offer on the table, when it is refused, simply walk away and go to their competitor. Most people want to make money, and think of their hourly rate. If they can make a couple hundred dollars off of you quickly, they would rather do that then pass it up.

This exactly.

To add a little:  Research it.  Figure out exactly what is a fair price.  At best, average the Edmunds/KBB values for the car.  Run a Carfax and/or Autocheck on it. 

Go at the end of the month if you're dealing with a dealer.  They're highly motivated then... as they get all sorts of kickbacks if they make their numbers for the month.  Offer them a little less than your max value ... and if they don't take it, give them your max and HOLD.    If they don't bite, very kindly let them know you're too far apart on price, shake their hand and walk.   You'll have the keys in your hand in about 5 minutes.

The other thing to do is KEEP THE TRANSACTION SIMPLE.  They're used to dealing with the old 4-square page:  They'll write down sales price, trade in price, down payment and monthly payment.   The dealer has done this a thousand times.  They can juggle those numbers all over the place such that "it feels like less but is actually more."  If you're paying cash, you're down to 2 squares.  Refuse to do a trade in... and you're down to 1.  There is no gaming to be done with one square.