Why pay cash for a car?

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dcabler
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Re: Why pay cash for a car?

Post by dcabler » Wed Nov 15, 2017 10:32 am

Probably repeating what others have said so far

I like to give the car dealer only one variable to work with during the negotiation phase - the price of the car.
If I add financing, that's a variable. So I don't finance.
If I add a trade-in, that's another variable. So I sell the old car myself.

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JupiterJones
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Re: Why pay cash for a car?

Post by JupiterJones » Wed Nov 15, 2017 10:37 am

bloom2708 wrote:
Wed Nov 15, 2017 10:00 am
Someone should do a documentary like "Supersize Me" but instead of food, ANY time you are given the option to finance something, you have to do it.

Car, furniture, electronics. 0% for 3 years! Can't pass it up. Good deal! :shock:

I will pay $500 extra to not have a car loan for 4 or 5 years. I don't want a furniture loan. I don't want to pay for my phone for 3 years.

Everything is now just a "monthly payment". That is not good for most.
Good idea! I would watch that movie.

One of Dave Ramsey's better sayings is along the lines of ""Broke people ask 'How much are the payments?"; Wealthy people ask 'How much does it cost?'"
Stay on target...

David Scubadiver
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Re: Why pay cash for a car?

Post by David Scubadiver » Wed Nov 15, 2017 10:51 am

I've purchased three new cars in my life, and paid cash for each one. The first was a Nisan Murano and they took my personal check and I left with the car. The other two were Honda CRV's and I technically financed them because the dealer would not take a personal check. However, the finance company did and it was paid off on day 1.

Why I did this, I could not tell you. I expect I was not offered an ultra low rate and I had a enough cash on hand. But if it is really costing you close to nothing, and having the liquidity makes you sleep better than being debt free and being less liquid, then I see nothing wrong with taking out a car loan and enjoying small monthly payments versus one large painful one.

BlueRidgePro
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Re: Why pay cash for a car?

Post by BlueRidgePro » Wed Nov 15, 2017 10:54 am

When negotiating a price, the dealer will take into account whether you are paying cash or financing. You will pay for a below-market finance rate in the sale price of the car.

ThankYouJack
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Re: Why pay cash for a car?

Post by ThankYouJack » Wed Nov 15, 2017 10:57 am

simplicity. Once you get to a certain point in savings, saving time and keeping it simple becomes more important than playing games trying to maximizing every dollar out of things.

Rupert
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Re: Why pay cash for a car?

Post by Rupert » Wed Nov 15, 2017 11:05 am

BlueRidgePro wrote:
Wed Nov 15, 2017 10:54 am
When negotiating a price, the dealer will take into account whether you are paying cash or financing. You will pay for a below-market finance rate in the sale price of the car.
I have not found this to be true at all. These days, I do all my negotiating on-line. The salesman and I settle on an out-the-door price of the car before the topic of how I'm going to pay for it even comes up.

I totally understand that some people don't like car payments and will always pay cash for that reason. But that really is an emotional decision, not a financial one. Today it often makes more financial sense to finance.

smitcat
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Re: Why pay cash for a car?

Post by smitcat » Wed Nov 15, 2017 11:21 am

Rupert wrote:
Wed Nov 15, 2017 11:05 am
BlueRidgePro wrote:
Wed Nov 15, 2017 10:54 am
When negotiating a price, the dealer will take into account whether you are paying cash or financing. You will pay for a below-market finance rate in the sale price of the car.
I have not found this to be true at all. These days, I do all my negotiating on-line. The salesman and I settle on an out-the-door price of the car before the topic of how I'm going to pay for it even comes up.

I totally understand that some people don't like car payments and will always pay cash for that reason. But that really is an emotional decision, not a financial one. Today it often makes more financial sense to finance.
Yes - this is what I have found as well. If you keep it a financial decision and not make it emotional you can choose the best option(s) for yourself.
My last car was bought for cash but the one before that was financed, strictly a financial decision at each point in time.

Roothy
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Re: Why pay cash for a car?

Post by Roothy » Wed Nov 15, 2017 11:26 am

Rupert wrote:
Wed Nov 15, 2017 11:05 am
BlueRidgePro wrote:
Wed Nov 15, 2017 10:54 am
When negotiating a price, the dealer will take into account whether you are paying cash or financing. You will pay for a below-market finance rate in the sale price of the car.
I have not found this to be true at all. These days, I do all my negotiating on-line. The salesman and I settle on an out-the-door price of the car before the topic of how I'm going to pay for it even comes up.

I totally understand that some people don't like car payments and will always pay cash for that reason. But that really is an emotional decision, not a financial one. Today it often makes more financial sense to finance.
^^^^
This. You know what the car "should" cost because you have checked on a million forums dedicated to exactly how much people have paid for X car with Y features. In the old days, cash got you a discount. In these days when car companies are actually just banks who sell a few cars on the side, financing (if you have good credit, and make sure you are not paying more for the car just because you are financing) gets you a better deal.

I bought a new Subaru Outback about two years ago for $29000 out the door. I was offered a 1.75%, no money down, 4 year loan right when I was about to wire over the money for it. Why wouldn't I take that deal? Inflation alone is usually about 1.75%. And yes, I'm taking a risk that since the $29,000 was in the market instead of in the car, I might have actually lost money if the market had gone down. That's a gamble I'm willing to take. (The risk happened to have paid off handsomely, since the market has increased by over 40% since then.)

KyleAAA
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Re: Why pay cash for a car?

Post by KyleAAA » Wed Nov 15, 2017 11:35 am

BlueRidgePro wrote:
Wed Nov 15, 2017 10:54 am
When negotiating a price, the dealer will take into account whether you are paying cash or financing. You will pay for a below-market finance rate in the sale price of the car.
This is not at all true. Here's how it actually works. For MANUFACTURER financing you often (but not always) give up a rebate in exchange for a super low interest rate. But the majority of the time, when a dealership arranges financing, it's with an outside bank and not the manufacturer. The dealership receives a commission for this referral. It is sometimes tied to the interest rate they convince you to take (so higher == better for them) and sometimes it isn't (the dealership is indifferent because they get the same kickback regardless of rate). To the extent the dealership receives a kickback, they are almost always willing to share some amount of that kickback with the buyer, usually about 50% or even higher (i.e. it's a win/win). Thus, buyers who finance generally come out ahead even after controlling for the interest rate paid, within reason. If you get tricked into paying 10% when you could have gotten 2% you obviously lose, but I'm skeptical this ever actually happens.
BlueRidgePro wrote:
Wed Nov 15, 2017 10:54 am
You will pay for a below-market finance rate in the sale price of the car.
Unambiguously false. That's just not how it works outside of manufacturer promotional rates, and it's not even universally true with those.

chicagoan23
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Re: Why pay cash for a car?

Post by chicagoan23 » Wed Nov 15, 2017 12:11 pm

KyleAAA wrote:
Wed Nov 15, 2017 11:35 am
BlueRidgePro wrote:
Wed Nov 15, 2017 10:54 am
When negotiating a price, the dealer will take into account whether you are paying cash or financing. You will pay for a below-market finance rate in the sale price of the car.
This is not at all true. Here's how it actually works. For MANUFACTURER financing you often (but not always) give up a rebate in exchange for a super low interest rate. But the majority of the time, when a dealership arranges financing, it's with an outside bank and not the manufacturer. The dealership receives a commission for this referral. It is sometimes tied to the interest rate they convince you to take (so higher == better for them) and sometimes it isn't (the dealership is indifferent because they get the same kickback regardless of rate). To the extent the dealership receives a kickback, they are almost always willing to share some amount of that kickback with the buyer, usually about 50% or even higher (i.e. it's a win/win). Thus, buyers who finance generally come out ahead even after controlling for the interest rate paid, within reason. If you get tricked into paying 10% when you could have gotten 2% you obviously lose, but I'm skeptical this ever actually happens.
BlueRidgePro wrote:
Wed Nov 15, 2017 10:54 am
You will pay for a below-market finance rate in the sale price of the car.
Unambiguously false. That's just not how it works outside of manufacturer promotional rates, and it's not even universally true with those.
This has been true in my experience as well. When I bought my car in 2012 I was prepared to write a check for approximately $35,000, and would have taken almost any discount on the purchase price in exchange for a cash payment. Even a meager 2% discount would have been $700 and I would have taken it. Instead I was told that the price actually would go up if I paid cash at the time of sale, so I financed at 0% interest. There clearly are dealer incentives for financing new cars.

I won't discount the psychic benefits of being debt free, not having monthly payments, etc. but you are almost always better off financially if you finance a new car at a low or zero rate.
I will pay $500 extra to not have a car loan for 4 or 5 years. I don't want a furniture loan. I don't want to pay for my phone for 3 years.

Everything is now just a "monthly payment". That is not good for most.
Nothing wrong with that; just not my preference.

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unclescrooge
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Re: Why pay cash for a car?

Post by unclescrooge » Wed Nov 15, 2017 1:05 pm

RDHlooking4FIRE wrote:
Sun Nov 12, 2017 5:58 pm
supersecretname wrote:
Sun Nov 12, 2017 5:55 pm
The prevailing wisdom is that by financing you will buy more car than you should. If you will truly get the same exact car, financing may not be a bad idea.

I got a 2017 base honda fit and am paying 0.9% for 5 years. Made no sense to pay that in cash, and it didn't influence my decision.

Poll: do most boggleheads pay cash for cars or get low interest loans?
I paid cash. Had my wife take our a loan at 0.9%. Invested the difference in municipal bonds paying 3%.

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knpstr
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Re: Why pay cash for a car?

Post by knpstr » Wed Nov 15, 2017 1:20 pm

smitcat wrote:
Wed Nov 15, 2017 9:56 am
knpstr wrote:
Wed Nov 15, 2017 9:44 am
smitcat wrote:
Wed Nov 15, 2017 9:04 am
knpstr wrote:
Wed Nov 15, 2017 8:15 am
Many times paying cash "forces" one to buy a less expensive car than they otherwise would have when just looking at payment size; which is a good thing in my opinion.
That sounds a lot like you need to pay cash because it serves as a replacement for planning and self control.
Absolutely, when you survey the personal finances of the "average" U.S. citizen, financial planning and financial self-control are lacking.
I am thankful that for the most part the average US citizen is not typically on this Bogle site.
Also thankful that I continue to learn as I age and apply as much as I can to the current situations that exist.

There was a time when using a dealer to finance a car was always a financial loser, similarly there was a time when leasing a vehicle was always a loser financially.
But then there was also a time when buying Sears tools/harware was almost a guarantee of quality and warrantee - I hope I remain flexible in my ability to keep up with the changes.
Yes and I think on average, buying a more expensive car (say comparing buying new vs used, of the same model) is always a "financial loser".
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

InsideTheBeltway
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Re: Why pay cash for a car?

Post by InsideTheBeltway » Wed Nov 15, 2017 1:38 pm

Those 0% loans are only on new cars and new car values drop $5,000-$10,000 the second you drive the vehicle off the dealer lot. You might "make" $500 over five years vs. paying cash, but with financing you lost $5,000 instantly and the car only keep depreciating. Used car rates are 4%-8% depending on credit. People overspend on consumer goods when financing and that includes cars. Drive through middle class neighborhoods and you'll see the driveways loaded with 50k-100k in automobiles. These are people making 75k-100k a year but have 50k+ in depreciating assets parked in the driveway.

If the goal is becoming a millionaire, pay cash for a used car until your net worth is over $1M. The cheaper the car, the better, because all automobiles depreciate in value rapidly. Financing a $40,000 new car at 0% is awful financially vs. paying cash for a used $20,000 car.

ThePrince
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Re: Why pay cash for a car?

Post by ThePrince » Wed Nov 15, 2017 1:55 pm

RDHlooking4FIRE wrote:
Sun Nov 12, 2017 5:16 pm
I can understand paying off a mortgage, because rates are higher than car loans. And you wouldnt take a new loan out to invest in the market now.

I am saving cash for my next car purchse. But why? Car loans are cheap. My current car is paid off and i like being debt free. Is that the best method?
Don’t go into debt, especially for something that goes down in value. Instead of paying the car company or bank, how about you take the money you would have paid them and invest it?

ThePrince
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Re: Why pay cash for a car?

Post by ThePrince » Wed Nov 15, 2017 1:59 pm

JupiterJones wrote:
Wed Nov 15, 2017 10:37 am
bloom2708 wrote:
Wed Nov 15, 2017 10:00 am
Someone should do a documentary like "Supersize Me" but instead of food, ANY time you are given the option to finance something, you have to do it.

Car, furniture, electronics. 0% for 3 years! Can't pass it up. Good deal! :shock:

I will pay $500 extra to not have a car loan for 4 or 5 years. I don't want a furniture loan. I don't want to pay for my phone for 3 years.

Everything is now just a "monthly payment". That is not good for most.
Good idea! I would watch that movie.

One of Dave Ramsey's better sayings is along the lines of ""Broke people ask 'How much are the payments?"; Wealthy people ask 'How much does it cost?'"
+++++1

BlueRidgePro
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Re: Why pay cash for a car?

Post by BlueRidgePro » Wed Nov 15, 2017 2:21 pm

Lots of people in denial...

Having had a car dealers as clients, I've seen all the tricks - including dealing with buyers who think that they know it all... Dealers are in business to make money.

The prices that you can find online may or may not be close to what the dealer pays at any given point in time. Dealers and car manufacturers do not give away money with zero percent financing. It gets wrapped into the price. A buyer who makes it known that he's paying cash can negotiate a lower price.

KyleAAA
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Re: Why pay cash for a car?

Post by KyleAAA » Wed Nov 15, 2017 2:27 pm

InsideTheBeltway wrote:
Wed Nov 15, 2017 1:38 pm
Those 0% loans are only on new cars and new car values drop $5,000-$10,000 the second you drive the vehicle off the dealer lot. You might "make" $500 over five years vs. paying cash, but with financing you lost $5,000 instantly and the car only keep depreciating. Used car rates are 4%-8% depending on credit. People overspend on consumer goods when financing and that includes cars. Drive through middle class neighborhoods and you'll see the driveways loaded with 50k-100k in automobiles. These are people making 75k-100k a year but have 50k+ in depreciating assets parked in the driveway.

If the goal is becoming a millionaire, pay cash for a used car until your net worth is over $1M. The cheaper the car, the better, because all automobiles depreciate in value rapidly. Financing a $40,000 new car at 0% is awful financially vs. paying cash for a used $20,000 car.
The new-car depreciation hit isn't nearly as large as it once was, at least for the types of reliable, practical vehicles you're talking about (Corolla, Civic, Accord, etc). Try to buy a 2 year old Accord in great condition for a LARGE discount and see what I mean. There's absolutely no way a $15k Corolla drops in value $5-10k when you drive it off the lot. I sold a 12 year old Corolla with 140k miles on it for around $4.5k, so it barely depreciated $10k in 12 years.

Besides, people buy new cars for a lot of reasons. Finances aren't the only, or even most important, consideration. If you choose to buy a new car for non-financial reasons, it makes sense to maximize your benefit. You're comparing apples to semi-trucks.
InsideTheBeltway wrote:
Wed Nov 15, 2017 1:38 pm
Drive through middle class neighborhoods and you'll see the driveways loaded with 50k-100k in automobiles
I've driven through a lot of middle class neighborhoods in a lot of different states and I've never seen this. There are SOME driveway with BMWs but to say they are "filled" with such vehicles is a gross exaggeration.

Raladic
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Re: Why pay cash for a car?

Post by Raladic » Wed Nov 15, 2017 2:30 pm

InsideTheBeltway wrote:
Wed Nov 15, 2017 1:38 pm
If the goal is becoming a millionaire, pay cash for a used car until your net worth is over $1M. The cheaper the car, the better, because all automobiles depreciate in value rapidly. Financing a $40,000 new car at 0% is awful financially vs. paying cash for a used $20,000 car.
Sure maybe, but that used car for 20k may not come with the safety features I want (automatic breaking, adaptive cruise control, lane assist), so sometimes even if your goal is to have a high net worth, you should take a moment to enjoy life and buy what you want if it's in your budget.

In any case, paying cash does not always get you more, sometimes there are incentives to dealers to get financing that are beyond what you can negotiate for cash.

I negotiated my price, then asked if there's any more if I pay cash or not and eventually settled for 0% for 4 years, then put 10k (the max they would allow) down onto my 2% cashback credit card, paid off the CC right away as usual and have the rest of the car at 0%, which frees up the money to be invested instead.

I also don't get the problem people on this thread seem to have with "another bill", you setup autopay once and forget about it until it's paid off.

KyleAAA
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Re: Why pay cash for a car?

Post by KyleAAA » Wed Nov 15, 2017 2:31 pm

BlueRidgePro wrote:
Wed Nov 15, 2017 2:21 pm
The prices that you can find online may or may not be close to what the dealer pays at any given point in time. Dealers and car manufacturers do not give away money with zero percent financing. It gets wrapped into the price.
If you'll read carefully, you'll notice those 0% promotional rates were SPECIFICALLY EXCLUDED from the claim that financing will get you a better price. Those promotional rates make up a small minority of all car financing transactions, and the existence of an exception does not disprove the general rule.
BlueRidgePro wrote:
Wed Nov 15, 2017 2:21 pm
A buyer who makes it known that he's paying cash can negotiate a lower price.
Those car dealerships you used to do business with will flatly tell you that you're wrong. Dealerships earn additional revenue for arranging financing and, with a few exceptions, are almost always willing to give you a break on the price to gain that revenue BEYOND what you'd get if you paid cash. But don't take my word for it, go ask them for yourself. Selling new cars is a low-margin business and dealerships rely on the tangential revenue (kickback for arranging financing, selling extended warranties, etc) and their service departments to stay afloat. As you say, the dealership isn't going to lose money to sell you a car. Since the margin on most models of new cars is low to begin with, after a certain point the only way you're going to get them to lower the price is to agree to something that brings them marginal revenue. Letting them arrange financing is the simplest way to do that. You can always pay it off next week after taking the extra discount if you really don't want to deal with payments for whatever reason.

andypanda
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Re: Why pay cash for a car?

Post by andypanda » Wed Nov 15, 2017 3:07 pm

I have a question, it's at the end.

"but you are almost always better off financially if you finance a new car at a low or zero rate."

While there is some truth to this, speaking purely of dollars and cents, it appears to primarily work if you can negotiate the price down far enough and still get the great rate. A used car is almost always a better deal financially than a new car.

I'm 67. I used to have a 1967 4-door Chevelle that I paid $600 for. I've had 2 Datsun B-210's. I had an '86 Subaru GL wagon for 14 years, but it had dual-range 4wd, armored exhaust, skidplate, all factory, and I used it for surf fishing the Outer Banks for 14 years until the front end rusted off. Then I bought a used Camry.

Now I'm 5 years into retirement and I'm pretty much finished with pinching pennies and saving. I overdid it for 40 years. I admit it.

- The end of November I paid cash for a new 2016 4Runner Trail Premium and sold my 2010 Highlander Limited to a guy at the monthly poker tournament.
- Three days later I took my girlfriend to the dealer and bought her a new 2016 Avalon Touring.
- A month later I bought my remaining aunt and uncle a new 2016 Altima to replace their 10-year-old one.

So here's my question...

Should I have financed all 3 new cars? :)

bikechuck
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Re: Why pay cash for a car?

Post by bikechuck » Wed Nov 15, 2017 3:38 pm

bgf wrote:
Sun Nov 12, 2017 7:14 pm
RDHlooking4FIRE wrote:
Sun Nov 12, 2017 6:17 pm
bgf wrote:
Sun Nov 12, 2017 6:14 pm
can you get rates that low on used cars?
I dont think so.

So your point is look for rebates and pay cash?
personally, given my current net worth, I would only ever buy a used car. if i could buy a used car and borrow at < 1.0%... then maybe I would actually put up with the payment for 2-3 years and keep the cash in my MM. maybe.

there will (hopefully) come a time when the new car depreciation is negligible in comparison to the growth of my net worth, and if the joy I get from buying a brand spanking new vehicle is worth more to me than that depreciation, I'll buy a new car. Until then, I just cannot accept that kind of depreciation for something that functions identically.
I have purchased both new and used cars over my 60 + years. I believe that the best value is to buy new cars and drive them for 150,000 miles or more.

I buy smaller cars and have owned three Honda Civics. I can buy three of those for the price of a luxury car.

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steelerfan
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Re: Why pay cash for a car?

Post by steelerfan » Wed Nov 15, 2017 4:13 pm

The reason I pay cash for cars is because I got out of debt several years ago (minus the mortgage) at great sacrifice to my standard of living. Now, I pay cash for everything and I can sleep well at night knowing that whatever happens to my or DW's income, those cars are mine! I would never want to go back to that previous lifestyle.
"You make most of your money in a bear market, you just don't realize it at the time." - Shelby Cullom Davis

smitcat
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Re: Why pay cash for a car?

Post by smitcat » Wed Nov 15, 2017 4:17 pm

knpstr wrote:
Wed Nov 15, 2017 1:20 pm
smitcat wrote:
Wed Nov 15, 2017 9:56 am
knpstr wrote:
Wed Nov 15, 2017 9:44 am
smitcat wrote:
Wed Nov 15, 2017 9:04 am
knpstr wrote:
Wed Nov 15, 2017 8:15 am
Many times paying cash "forces" one to buy a less expensive car than they otherwise would have when just looking at payment size; which is a good thing in my opinion.
That sounds a lot like you need to pay cash because it serves as a replacement for planning and self control.
Absolutely, when you survey the personal finances of the "average" U.S. citizen, financial planning and financial self-control are lacking.
I am thankful that for the most part the average US citizen is not typically on this Bogle site.
Also thankful that I continue to learn as I age and apply as much as I can to the current situations that exist.

There was a time when using a dealer to finance a car was always a financial loser, similarly there was a time when leasing a vehicle was always a loser financially.
But then there was also a time when buying Sears tools/harware was almost a guarantee of quality and warrantee - I hope I remain flexible in my ability to keep up with the changes.
Yes and I think on average, buying a more expensive car (say comparing buying new vs used, of the same model) is always a "financial loser".
Yes I agree - we have bought our 'expensive' cars and/or new through the business.
Similarly - once our savings goals have been hit we have bought all kinds of things that some would consider expensive.
But many of those unusual and 'expensive' cars have then been sold for the same amount or even for more.
I think we have drifted from the question and goal of this thread...

bgf
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Re: Why pay cash for a car?

Post by bgf » Wed Nov 15, 2017 4:54 pm

bikechuck wrote:
Wed Nov 15, 2017 3:38 pm
bgf wrote:
Sun Nov 12, 2017 7:14 pm
RDHlooking4FIRE wrote:
Sun Nov 12, 2017 6:17 pm
bgf wrote:
Sun Nov 12, 2017 6:14 pm
can you get rates that low on used cars?
I dont think so.

So your point is look for rebates and pay cash?
personally, given my current net worth, I would only ever buy a used car. if i could buy a used car and borrow at < 1.0%... then maybe I would actually put up with the payment for 2-3 years and keep the cash in my MM. maybe.

there will (hopefully) come a time when the new car depreciation is negligible in comparison to the growth of my net worth, and if the joy I get from buying a brand spanking new vehicle is worth more to me than that depreciation, I'll buy a new car. Until then, I just cannot accept that kind of depreciation for something that functions identically.
I have purchased both new and used cars over my 60 + years. I believe that the best value is to buy new cars and drive them for 150,000 miles or more.

I buy smaller cars and have owned three Honda Civics. I can buy three of those for the price of a luxury car.
is there any particular reason why that strategy provides more value than buying a 2-3 year old used car with 20k-30k miles on it, and then driving it for 120k or more? or is buying new just your personal preference?

you can save A LOT buying a slightly used car, and you can still drive it for well over 100k.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

chicagoan23
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Re: Why pay cash for a car?

Post by chicagoan23 » Wed Nov 15, 2017 5:43 pm

BlueRidgePro wrote:
Wed Nov 15, 2017 2:21 pm
Lots of people in denial...

Having had a car dealers as clients, I've seen all the tricks - including dealing with buyers who think that they know it all... Dealers are in business to make money.

The prices that you can find online may or may not be close to what the dealer pays at any given point in time. Dealers and car manufacturers do not give away money with zero percent financing. It gets wrapped into the price. A buyer who makes it known that he's paying cash can negotiate a lower price.
I fully agree that dealers are in business to make money. I think the point is that they make more money by arranging financing than they do when you pay cash.

If they honestly made more money when the buyer pays cash, as opposed to when the buyer gets 0% financing, why wouldn't my dealer take my offer to write them a check for the negotiated price that same day? All I was asking for was a 2% discount on the price. They wouldn't take it, and actually said I would have to write a check for more than I would be paying over 60 installments.

Many others who have posted have said the same thing.

chicagoan23
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Re: Why pay cash for a car?

Post by chicagoan23 » Wed Nov 15, 2017 5:45 pm

InsideTheBeltway wrote:
Wed Nov 15, 2017 1:38 pm
Those 0% loans are only on new cars and new car values drop $5,000-$10,000 the second you drive the vehicle off the dealer lot. You might "make" $500 over five years vs. paying cash, but with financing you lost $5,000 instantly and the car only keep depreciating. Used car rates are 4%-8% depending on credit. People overspend on consumer goods when financing and that includes cars. Drive through middle class neighborhoods and you'll see the driveways loaded with 50k-100k in automobiles. These are people making 75k-100k a year but have 50k+ in depreciating assets parked in the driveway.

If the goal is becoming a millionaire, pay cash for a used car until your net worth is over $1M. The cheaper the car, the better, because all automobiles depreciate in value rapidly. Financing a $40,000 new car at 0% is awful financially vs. paying cash for a used $20,000 car.
That's not the question though. The question is whether, when buying a particular car, you should pay cash or finance it. It seems like in almost all cases financing is the smarter move. You could choose a lesser car, or a used car, or a bicycle and public transportation......but once you've selected the car, do you pay cash or not? In my case, the clear answer was to not pay cash.

smitty1515
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Re: Why pay cash for a car?

Post by smitty1515 » Wed Nov 15, 2017 6:29 pm

Not true for all but here’s why I’m a proponent of paying cash for vehicles.

The simple reason is to prevent overspending. Of course financing at 0% on paper is the right move however how many thousands if not tens of thousands of dollars are consumers adding to their purchase by not paying cash?
Be fearful when others are greedy and greedy when others are fearful. -Warren Buffett

hudson
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Re: Why pay cash for a car?

Post by hudson » Thu Nov 16, 2017 6:39 am

smitcat wrote:
Wed Nov 15, 2017 11:21 am
Rupert wrote:
Wed Nov 15, 2017 11:05 am
BlueRidgePro wrote:
Wed Nov 15, 2017 10:54 am
When negotiating a price, the dealer will take into account whether you are paying cash or financing. You will pay for a below-market finance rate in the sale price of the car.
I have not found this to be true at all. These days, I do all my negotiating on-line. The salesman and I settle on an out-the-door price of the car before the topic of how I'm going to pay for it even comes up.

I totally understand that some people don't like car payments and will always pay cash for that reason. But that really is an emotional decision, not a financial one. Today it often makes more financial sense to finance.
Yes - this is what I have found as well. If you keep it a financial decision and not make it emotional you can choose the best option(s) for yourself.
My last car was bought for cash but the one before that was financed, strictly a financial decision at each point in time.
I've purchased 2 new vehicles in the last 10 years.

Each time, I used the "out the door" bidding method. (Like denovo outlines: viewtopic.php?p=1826365#p1826365)

Each time there was a financing deal something like...a $500 rebate or a very low interest loan. A dealer never has offered to drop the "out the door" price so that I would take out a loan. I could warm up to such an offer....if I could pay it off early.

smitcat
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Re: Why pay cash for a car?

Post by smitcat » Thu Nov 16, 2017 7:03 am

hudson wrote:
Thu Nov 16, 2017 6:39 am
smitcat wrote:
Wed Nov 15, 2017 11:21 am
Rupert wrote:
Wed Nov 15, 2017 11:05 am
BlueRidgePro wrote:
Wed Nov 15, 2017 10:54 am
When negotiating a price, the dealer will take into account whether you are paying cash or financing. You will pay for a below-market finance rate in the sale price of the car.
I have not found this to be true at all. These days, I do all my negotiating on-line. The salesman and I settle on an out-the-door price of the car before the topic of how I'm going to pay for it even comes up.

I totally understand that some people don't like car payments and will always pay cash for that reason. But that really is an emotional decision, not a financial one. Today it often makes more financial sense to finance.
Yes - this is what I have found as well. If you keep it a financial decision and not make it emotional you can choose the best option(s) for yourself.
My last car was bought for cash but the one before that was financed, strictly a financial decision at each point in time.
I've purchased 2 new vehicles in the last 10 years.

Each time, I used the "out the door" bidding method. (Like denovo outlines: viewtopic.php?p=1826365#p1826365)

Each time there was a financing deal something like...a $500 rebate or a very low interest loan. A dealer never has offered to drop the "out the door" price so that I would take out a loan. I could warm up to such an offer....if I could pay it off early.
That is great - it did not work for us in the NY/Ct area for any vehicles we were interested in.

dlw322
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Re: Why pay cash for a car?

Post by dlw322 » Thu Nov 16, 2017 7:42 am

When I bought a new car about 10 years ago I negotiated the purchase price online. I checked all of his numbers to make sure the OTD price with all taxes & fees added up to what we agreed on. I went in to the dealer to give a deposit and told him I'd be paying cash. They then offered me an additional $1,000 rebate to finance with them. I made sure there were no prepayment penalties on the loan and told them I would finance the minimum amount necessary to get the rebate. I did some research and found out that the reason they do this is because they get a kickback as long as I keep the loan at least 90 days.

When I went into the dealer to pick up the car the finance guy tried to play games and tell me I didn't qualify for the top rate (I have excellent credit). I told him to put whatever rate he wants in there but I know about the kickback and if I don't like the rate the loan will be paid of before 90 days. Told him if they give me a favorable rate then I will do them a favor and hold it for 90 days. He didn't believe me I guess and gave me I think it was about a 7% rate. As soon as I got the loan documents I paid off the loan immediately.

So all in it cost me a few bucks to finance for a couple of weeks and a short time with the finance guy :twisted: but I saved $1,000 and I got an extra few weeks use of the cash.

I bought a new car more recently and no offers like that were available. They only had the 0% financing but you have to give up the rebate. So for that one I just took the rebate and paid cash.

andypanda
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Re: Why pay cash for a car?

Post by andypanda » Thu Nov 16, 2017 8:24 am

"All I was asking for was a 2% discount on the price. They wouldn't take it, and actually said I would have to write a check for more than I would be paying over 60 installments."

Every deal is different and it's hard, or impossible, to know what sales goals a specific dealer is trying to meet at the end of the month or quarter. I had a Subaru dealer sell me a Forester on the last day of the month for $1k less than my rockbottom target price - the sales manager said there was a 3-day trip to the Bahamas at stake for his team and they needed one more sale. Maybe it was even true.

Then there's demand and availability. I don't know what brand and model you were buying, but 2% off the sticker doesn't seem like much, even on a current model year vehicle. Both of the following were end of the model year deals just after last Thanksgiving, both with less than 10 miles on the odometer...

On my 2016 4Runner Trail Premium w/KDSS they dropped from the $42k sticker to $38k, or 9.5%. (I asked for $5k off, they countered $1k off, I said no and sat there like a lump of coal. Their next offer was $4k and I took it. I went in there aiming for $2500 off - it's a 4Runner and they only make 100k a year.)

On my girlfriend's 2016 Avalon Touring 3 days later they dropped the $39k sticker to $32k, or 17.9%. The $7k drop included the $3k Toyota rebate. I guess they wanted to move it, they had it shined up and sitting next to the receptionist with a red bow on the hood. That was a quick negotiation too.

Yes, they'll be a model year older when I sell them eventually, but they'll have lower mileage due to being bought at the end of the model year.

Anyway, it's time to turn the coffee pot off and get out my 28' ladder. I'm repairing and painting an attic accent window on my girlfriend's house. It's been neglected for 23 years from the look of things. I'd rather do odd jobs than go to a gym.

smitcat
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Re: Why pay cash for a car?

Post by smitcat » Thu Nov 16, 2017 9:48 am

"2% discount on the price"

FWIW- my cash buy target has been 20% off MSRP or higher over the last 3 transactions.
You can get any quotes you like or do the deal any way you like but at least the MSRP is a 'waterline' that you can use to compare one dealer or vehicle to another.
Some manufacturers will not budge below a certain % on MSRP but again you can compare the same vehicle from dealer to dealer utilizing the MSRP.
Of course you can also 'detect' the dealer sliding in slightly different vehicles (options) when you use the MSRP as well.

Rotarman
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Re: Why pay cash for a car?

Post by Rotarman » Thu Nov 16, 2017 11:58 am

I've made similar arguments before (often to deaf ears) about credit cards. Studies show that people spend less money when they use cash. Invariably people here will claim that their purchases are not influenced by cash or credit, and there's really no easy way to test them individually. It's kind of like how everyone is an above average driver (you're a better driver than 50% of people on the road, right??). I'm a bogleheads but I'm also a human being, and companies have spent fortunes determining exactly how to make human beings spend more money. They're not giving your 0% financing out of the goodness of their heart.

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PaddyMac
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Re: Why pay cash for a car?

Post by PaddyMac » Thu Nov 16, 2017 12:32 pm

We paid cash for our two cars, and I love not having a monthly payment or paying interest. We bought the last car using the Costco "no haggle" price.

However, one of our cars is coming up on ten years and we'd like to replace it next year. But we are semi-retired and next year we'll only be 57 so we can only access our taxable accounts. I don't want to drain that much from those accounts just as our royalty income is decreasing. So when the time comes, I'll be open to hearing about zero or low interest financing from the car dealers. If that doesn't sit well, we may just keep the car another couple of years until we're 59.5 and can access our SEPs.

So we're keeping an open mind. I hate having a monthly payment, but balancing withdrawals is another factor now.

smitcat
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Re: Why pay cash for a car?

Post by smitcat » Thu Nov 16, 2017 12:40 pm

PaddyMac wrote:
Thu Nov 16, 2017 12:32 pm
We paid cash for our two cars, and I love not having a monthly payment or paying interest. We bought the last car using the Costco "no haggle" price.

However, one of our cars is coming up on ten years and we'd like to replace it next year. But we are semi-retired and next year we'll only be 57 so we can only access our taxable accounts. I don't want to drain that much from those accounts just as our royalty income is decreasing. So when the time comes, I'll be open to hearing about zero or low interest financing from the car dealers. If that doesn't sit well, we may just keep the car another couple of years until we're 59.5 and can access our SEPs.

So we're keeping an open mind. I hate having a monthly payment, but balancing withdrawals is another factor now.
FWIW - we beat CostCo no haggle price on the last purchase in August of 2016 by almost (not quite) 5% of the price.

smitcat
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Re: Why pay cash for a car?

Post by smitcat » Thu Nov 16, 2017 12:48 pm

Rotarman wrote:
Thu Nov 16, 2017 11:58 am
I've made similar arguments before (often to deaf ears) about credit cards. Studies show that people spend less money when they use cash. Invariably people here will claim that their purchases are not influenced by cash or credit, and there's really no easy way to test them individually. It's kind of like how everyone is an above average driver (you're a better driver than 50% of people on the road, right??). I'm a bogleheads but I'm also a human being, and companies have spent fortunes determining exactly how to make human beings spend more money. They're not giving your 0% financing out of the goodness of their heart.
Yes I know. I worked for a company that offered , tracked and measured folks that would pay more or spend more for using credit.
We kept huge files by company and bank (yes bank) on those who were most likely to utilize extra credit so they could tailor offers for those persons.

I would hope that folks here would be able to identify and control their credit use rather than having it 'taken away' so they would not stray.
But heck - I have been wrong before.
If you do have control of your own finances you can use this to your advantage regardless of what the masses do themselves.
Even though this post is about car financing you brought up CC usage.
FWIW - we 'charged' a little bit over $150,000 in the past 12 months alone and that is all mostly on 3% and 4% cards.
The math works out real well in our favor....

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Re: Why pay cash for a car?

Post by ThrustVectoring » Thu Nov 16, 2017 12:54 pm

RDHlooking4FIRE wrote:
Sun Nov 12, 2017 5:16 pm
And you wouldnt take a new loan out to invest in the market now.
I would, if the rate is attractive enough and I'm not taking on too much leverage. Especially since auto loans are fixed-rate and have a relatively decent term.

Do note that any leverage could be "too much" if you aren't in a position to wait out a stock market correction. Like, retirees should definitely pay cash. 20-somethings with relatively few assets should probably take the loan, especially if their assets are largely in retirement accounts. You're just straight-up ahead in life if borrowing for a car means you can make this year's Roth IRA contribution, you can't carry contribution limits forward.

chicagoan23
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Re: Why pay cash for a car?

Post by chicagoan23 » Thu Nov 16, 2017 1:31 pm

smitcat wrote:
Thu Nov 16, 2017 9:48 am
"2% discount on the price"

FWIW- my cash buy target has been 20% off MSRP or higher over the last 3 transactions.
No, not a 2% discount off sticker....a 2% discount off the price we had already agreed to. That price was well below sticker and also below invoice, and was extensively researched for more than a month before I even walked into the dealership. I think my price was pretty close to the minimum that he would have taken for the car, because after we agreed on the price we then had to argue for about 30 minutes with the salesman and his manager over a fee to bring in the car from a different Toyota lot because the one I was at didn't have the color I wanted (they caved).

To sum up my posts on this thread:
Step One: Negotiate your very best price for the car, without discussing the financing.
Step Two: Offer to pay for the car either (i) through the dealer incentive financing at a low or zero interest rate, or (ii) with all cash.
Step Three: See which offer the dealer wants and how that affects the price you agreed to, if at all.

In my case, despite my having the cash readily available to pay for the car I wanted at the price I agreed to, the dealer still wanted me to finance the purchase. They would not even take a few hundred dollars off the out-the-door price of the car in exchange for a cash payment, and in fact told me that the price I negotiated would be higher if I did pay cash. Now, I could be a sucker and he could have been tricking me and really wanted the cash payment, but that seems like a bad negotiating tactic on his part.

I think what actually happened is that he got a financial benefit from arranging the financing that he would not have gotten had I paid cash. Maybe the finance company was hoping I would default and they could hit me with a ton of fees, maybe the dealer thought they could sell me some other financing protection where they would make the payments if I lose my job, maybe the dealer got some money if he arranged financing for 200 vehicles that month, who knows.

Bottom line: you will often come out ahead if you finance a new car purchase, as opposed to paying cash. You lose some of the psychic benefits of peace of mind from being debt free and similar non-financial concerns, which are legitimate. But you probably save money on the purchase, you gain liquidity, you have the time value of money over five years, and you have the opportunity to make money on the lump sum you didn't pay for the car.

smitcat
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Re: Why pay cash for a car?

Post by smitcat » Thu Nov 16, 2017 2:11 pm

chicagoan23 wrote:
Thu Nov 16, 2017 1:31 pm
smitcat wrote:
Thu Nov 16, 2017 9:48 am
"2% discount on the price"

FWIW- my cash buy target has been 20% off MSRP or higher over the last 3 transactions.
No, not a 2% discount off sticker....a 2% discount off the price we had already agreed to. That price was well below sticker and also below invoice, and was extensively researched for more than a month before I even walked into the dealership. I think my price was pretty close to the minimum that he would have taken for the car, because after we agreed on the price we then had to argue for about 30 minutes with the salesman and his manager over a fee to bring in the car from a different Toyota lot because the one I was at didn't have the color I wanted (they caved).

To sum up my posts on this thread:
Step One: Negotiate your very best price for the car, without discussing the financing.
Step Two: Offer to pay for the car either (i) through the dealer incentive financing at a low or zero interest rate, or (ii) with all cash.
Step Three: See which offer the dealer wants and how that affects the price you agreed to, if at all.

In my case, despite my having the cash readily available to pay for the car I wanted at the price I agreed to, the dealer still wanted me to finance the purchase. They would not even take a few hundred dollars off the out-the-door price of the car in exchange for a cash payment, and in fact told me that the price I negotiated would be higher if I did pay cash. Now, I could be a sucker and he could have been tricking me and really wanted the cash payment, but that seems like a bad negotiating tactic on his part.

I think what actually happened is that he got a financial benefit from arranging the financing that he would not have gotten had I paid cash. Maybe the finance company was hoping I would default and they could hit me with a ton of fees, maybe the dealer thought they could sell me some other financing protection where they would make the payments if I lose my job, maybe the dealer got some money if he arranged financing for 200 vehicles that month, who knows.

Bottom line: you will often come out ahead if you finance a new car purchase, as opposed to paying cash. You lose some of the psychic benefits of peace of mind from being debt free and similar non-financial concerns, which are legitimate. But you probably save money on the purchase, you gain liquidity, you have the time value of money over five years, and you have the opportunity to make money on the lump sum you didn't pay for the car.
Thank you for the clarification and I agree with all that you say through the entire post expect for one thing.
This .... "You lose some of the psychic benefits of peace of mind from being debt free" .
I lose no piece of mind nor do I believe there is some 'mystic' value in being dept free.
In once case my car asset will have less value and the overall portfolio will have more.
In the other case my car asset will have more value and the overall portfolio will have less.
It is just a financial decision at that point.

andypanda
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Re: Why pay cash for a car?

Post by andypanda » Thu Nov 16, 2017 4:34 pm

"not a 2% discount off sticker....a 2% discount off the price we had already agreed to."

I'm confused now, you agreed to a price and then asked them for a better deal? I'm surprised they didn't jack the price up on you.

I got a free hat with each car and a discount on all weather floor mats for the Avalon (they wouldn't do free), but the only further negotiation after we agreed on a price was when the F&I guy tried to sell me $2000 extended warranties - I talked him down to $525 for each 6 year/75k mile warranty.

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grabiner
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Re: Why pay cash for a car?

Post by grabiner » Thu Nov 16, 2017 9:57 pm

Whether to pay cash or finance depends on what is the best use of your money. I have bought three cars, and that was the basis for my decisions.

In 2001, my taxable investment account was all stock, with large capital gains. Therefore, it made sense for me to finance my car (through my credit union), as I would pay more in tax to sell enough stock than I paid in interest. I took out a three-year loan and paid it off early.

In 2007 and 2017, I had enough cash to pay cash for the car, so I would have only financed if there were an extra subsidy or free 0% interest, and neither of those was the case.
Wiki David Grabiner

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StevieG72
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Re: Why pay cash for a car?

Post by StevieG72 » Fri Nov 17, 2017 6:15 am

I paid cash for my last few vehicles for simplicity.

Had a cashiers check in hand to make the purchase, based on the out the door price negotiated prior to stepping foot in the dealership.

No finance charges, no extended warranty, no gap coverage, & no accessories.
Fools think their own way is right, but the wise listen to others.

bo105954027
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Re: Why pay cash for a car?

Post by bo105954027 » Fri Nov 17, 2017 2:16 pm

White Coat Investor wrote:
Sun Nov 12, 2017 6:01 pm
RDHlooking4FIRE wrote:
Sun Nov 12, 2017 5:16 pm
I can understand paying off a mortgage, because rates are higher than car loans. And you wouldnt take a new loan out to invest in the market now.

I am saving cash for my next car purchse. But why? Car loans are cheap. My current car is paid off and i like being debt free. Is that the best method?
For the same reason I pay cash for refrigerators. Or groceries. Or a pack of gum.

If the arbitrage on what you're paying for the car loan and what you'd earn in tax-free muni bond fund is enough money to make a difference in your financial life, you're probably buying too much car.

Take the example above- earning 0.8% more than what the loan is costing. So let's say it's a 5 year note on a $20K car. 0.8% of $20K is $160 a year. So maybe $500 over the course of 5 years. No thanks. I'll just pay cash. It's not that the math is wrong, it's just that I'm not going to deal with being in debt for 5 more years and keeping track of all that for $500.
I will back up this answer.

debt free = mind free
I'd like to pay money for my mind relax for the otherwise financing years.
Time in market beats timing the market.

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DaftInvestor
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Re: Why pay cash for a car?

Post by DaftInvestor » Fri Nov 17, 2017 2:32 pm

dcabler wrote:
Wed Nov 15, 2017 10:32 am
Probably repeating what others have said so far

I like to give the car dealer only one variable to work with during the negotiation phase - the price of the car.
If I add financing, that's a variable. So I don't finance.
If I add a trade-in, that's another variable. So I sell the old car myself.
You do realize you can negotiate for the price of the car and wait on bringing up financing and the trade-in until the end? I always work them as three separate transactions with the dealer.
I negotiated for the new car. If they ask me if I have a trade-in I tell them no or undecided. If they ask me about financing I also tell them undecided. Once I get my price for the car - I then tell them about the trade-in and negotiate the price. Once I'm done with that I then discuss with them how I'm going to pay for it. As others have mentioned sometimes at that point I get offered an additional discount if I finance it with them - other times I find out they have 0%. If they have neither than I likely pay cash.
(This 3-step process is even easier now in that you can do all your new-price negotiating up front via the web and email before having to go visit a dealer).

dcabler
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Re: Why pay cash for a car?

Post by dcabler » Fri Nov 17, 2017 3:16 pm

DaftInvestor wrote:
Fri Nov 17, 2017 2:32 pm
dcabler wrote:
Wed Nov 15, 2017 10:32 am
Probably repeating what others have said so far

I like to give the car dealer only one variable to work with during the negotiation phase - the price of the car.
If I add financing, that's a variable. So I don't finance.
If I add a trade-in, that's another variable. So I sell the old car myself.
You do realize you can negotiate for the price of the car and wait on bringing up financing and the trade-in until the end? I always work them as three separate transactions with the dealer.
I negotiated for the new car. If they ask me if I have a trade-in I tell them no or undecided. If they ask me about financing I also tell them undecided. Once I get my price for the car - I then tell them about the trade-in and negotiate the price. Once I'm done with that I then discuss with them how I'm going to pay for it. As others have mentioned sometimes at that point I get offered an additional discount if I finance it with them - other times I find out they have 0%. If they have neither than I likely pay cash.
(This 3-step process is even easier now in that you can do all your new-price negotiating up front via the web and email before having to go visit a dealer).
Yes I do realize that and have tried it. I have personally historically had better results with my method above. And I've had better prices negotiating in person than I have via the web. YMMV.

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Re: Why pay cash for a car?

Post by deltaneutral83 » Fri Nov 17, 2017 3:33 pm

There's two debates going on in this topic: used/new and then new financed/new cash. It seems like in the new financed/new cash debate, the new financed option (assuming favorable rate like 0-1%) consumes much more time than walking in and paying cash and being able to negotiate price more. I don't know as I've never bought a new car. I do get a chuckle out of the folks that use safety features as a means to to get a brand new car as opposed to 2-4 years old.

smitcat
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Re: Why pay cash for a car?

Post by smitcat » Fri Nov 17, 2017 3:33 pm

dcabler wrote:
Fri Nov 17, 2017 3:16 pm
DaftInvestor wrote:
Fri Nov 17, 2017 2:32 pm
dcabler wrote:
Wed Nov 15, 2017 10:32 am
Probably repeating what others have said so far

I like to give the car dealer only one variable to work with during the negotiation phase - the price of the car.
If I add financing, that's a variable. So I don't finance.
If I add a trade-in, that's another variable. So I sell the old car myself.
You do realize you can negotiate for the price of the car and wait on bringing up financing and the trade-in until the end? I always work them as three separate transactions with the dealer.
I negotiated for the new car. If they ask me if I have a trade-in I tell them no or undecided. If they ask me about financing I also tell them undecided. Once I get my price for the car - I then tell them about the trade-in and negotiate the price. Once I'm done with that I then discuss with them how I'm going to pay for it. As others have mentioned sometimes at that point I get offered an additional discount if I finance it with them - other times I find out they have 0%. If they have neither than I likely pay cash.
(This 3-step process is even easier now in that you can do all your new-price negotiating up front via the web and email before having to go visit a dealer).
Yes I do realize that and have tried it. I have personally historically had better results with my method above. And I've had better prices negotiating in person than I have via the web. YMMV.
Realizing a reasonable trade in value in a state like ours save us 8.625% in taxes on the value of the trade.
It becomes much harder to 'meet or beat' the trade in value by more than that % when selling privately.
Additionally - on our past 2 deals there was at least $1,000 extra incentive to use a same brand trade in that would not have been captured.

smitcat
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Re: Why pay cash for a car?

Post by smitcat » Fri Nov 17, 2017 3:36 pm

deltaneutral83 wrote:
Fri Nov 17, 2017 3:33 pm
There's two debates going on in this topic: used/new and then new financed/new cash. It seems like in the new financed/new cash debate, the new financed option (assuming favorable rate like 0-1%) consumes much more time than walking in and paying cash and being able to negotiate price more. I don't know as I've never bought a new car. I do get a chuckle out of the folks that use safety features as a means to to get a brand new car as opposed to 2-4 years old.
" I do get a chuckle out of the folks that use safety features as a means to to get a brand new car as opposed to 2-4 years old."

I do not use the safety features as a means to a new car , I use the fact that the new car/truck will cost me less than a used car/truck when purchasing it through our business.
At least that was the case the last dozen years or so.

Exafchick
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Re: Why pay cash for a car?

Post by Exafchick » Fri Nov 17, 2017 3:54 pm

This is such an interesting question with obviously many different opinions. I'm glad I saw this question because I was going to purchase a 2018 Honda Fit EX this year (dealers offer 0.9% finance for 36 months) but decided to wait until around this time next year for a couple of reasons:

1. If I wait until the 2019 models are coming out, I might be able to snag a gently used 2018 model
2. Instead of putting a large down payment on a new car and paying it off within 6 months, I can just purchase it outright because the dealer will want to clear out old inventory to make room for new

That way I still get the model I want and it will be barely used! Won't have to worry about financing because I will have enough in cash to buy it outright (and still leave a good size emergency fund).

WildBill
Posts: 391
Joined: Wed Jun 29, 2016 10:47 pm
Location: San Antonio, Texas

Re: Why pay cash for a car?

Post by WildBill » Fri Nov 17, 2017 5:53 pm

Howdy

There are often additional incentives if you do choose to finance. I don’t know why, but that was the deal with my last Hyundai.

So finance, get the incentives, and payoff the loan in full a week later.

W B
"Through chances various, through all vicissitudes, we make our way." Virgil, The Aeneid

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