Are you planning on buying a new or used car and paying with cash? The common thought is: I’m going to get a great deal at the car dealership, I have cash! Having cash when buying from a private seller will definitely help because private sellers don’t want to wait for someone to get approved for a car loan. Most private sellers will settle on a lower asking price for the convenience of instant cash and a completed sale.
Paying cash at car dealerships is a different story. Besides the used car dealers that have a small lot with only a few cars for sale, the majority offer to arrange financing for you. Sure they will be eager to sell you a car if you tell them you have cash because cash takes away the qualifying step (when a car dealer runs your credit report for financing purposes). Dealerships make extra money by arranging financing, so why would they want you to pay cash? They don’t. Banks and credit unions pay dealers for processing loans. When I owned my dealership, basically the higher the loan amount, the more I was paid. I earned anywhere between $200 to $1,000+ for a financed loan. Car dealerships today have a lot of competition. They struggle to purchase cars at dealer auctions for a good price because the large used car franchised dealers drive the prices up just to get cars on their lots. They do this knowing they probably won’t be able to sell the car for more than what they paid for it, but they do it because they know money will be made on processing loans, dealer documentation fees, and hidden fees. If someone comes in with the intent of paying cash, and will not pay any hidden fees or add-ons they don’t need, the dealer isn’t going to make money on the sale. At this point, unless it’s a car that has been on the lot for too long, they are not going to be interested in your cash offer.
A strategy must be in place to effectively negotiate a good deal. If you find yourself in this situation, and it is commendable that you have enough savings to pay cash, contact us and we’ll get you a personalized winning game plan that will outline exactly what needs to be done and how.
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