Cash or Loan

[x5x5x5]

I'm getting ready to negotiate pricing on a new car. I'm planning to pay cash but was wondering if it's wise to tell the dealer up front. Do dealers tend to be more willing to give discount on cash purchase or loan? Does it make a difference?

Thanks!

['97ventureowner]

It depends on the dealer. Some are more willing to give a better discount for cash, while others would rather have you get a loan through them. Many dealers make additional "commission" when a customer obtains financing for their vehicle through them,( many times at a much higher interest rate than they get at their bank or credit union.) That's why it is better most of the time to obtain financing at your local lending institution than a dealer.

[bmwgolfguy]

I agree with 97. Always start from a position of telling them you are going to pay cash or have a source lined up. That way you get to the real price you are going to pay for the car.

After that, you can then talk to them about trade-in value, loans, leases, etc. Dealers can and do play every game in the book with those three items and can make up on profit in these areas that they gave away when they gave you a lowball price to get you interested in buying the car.

Good luck!

[SweetSalesWoman]

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[sarah2007]

you should always get a better deal if your buying a car on finance as the dealer also gets a finance commision which he can use to sweeten the deal for you or reduce your interest i would def look at both options then taker the one that will suit you better

remember if the rate is low enough you can take the finance and leave your money in the bank earning interest
off setting the interest on your loan

['97ventureowner]

Originally Posted by sarah2007

you should always get a better deal if your buying a car on finance as the dealer also gets a finance commision which he can use to sweeten the deal for you or reduce your interest

Yeah in a dream world that would be possible. Most dealers take that commission for themselves rather than pass it on to their customers.That is why so many push the financing onto you as they make more money for themselves.

Originally Posted by sarah2007

remember if the rate is low enough you can take the finance and leave your money in the bank earning interest
off setting the interest on your loan

Last I checked banks were paying less than 3% on most savings accounts, not really a good return on investment when you can apply that money to lower the overall price or find better , cheaper financing options. That is why many financial planners recommend paying off credit card bills, and other non mortgage type interest loans/accounts as banks do not pay a good interest rate on savings accounts. Your money goes farther that way.