When people pay cash for a car..

[seen]

Well now I'm embarrassed.

Back when I was considering buying from a dealer I went up to the salesman and asked him how much more of a discount I could get if I paid in cash. I see now why he said nothing at all.

[TheMom]

The first car we paid in cash, we just wrote a personal check. The dealer for the 2nd one wanted a cashier's check. That time not only did the dealer want us to finance, but the bank wanted to loan us the money instead.

Definitely no extra discounts for paying cash, but often the deals on new are a rebate OR a lower finance rate, so I feel we got a slightly better price than had we financed.

[maat55]

You get a cheaper rate on insurance with higher credit scores because data shows that higher credit scores are better risks.

Same reason age 25+ gets better rates than under 25, etc.

Obviously not everyone under 25 is a worse driver than all drivers over 25 and the same holds true with different credit scores, but if the states allow it to be rated for (you can't rate for race, religion, sexual orientation, even if the data showed different risks).

If they didn't rate that way those with lower credit scores would have lower insurance rates, but those with higher credit scores would end up with higher rates as the risk would have to spread across a broader group.

I do not buy this argument. Driving and financial habbits have nothing in common.

[rj.phila]

Our last car we paid 9k in cash and 9k with check.

Smart move .

[bjl584]

..do some of you guys/gals really mean walking in there with a rubber-band of $100 bills? Or do most of you actually just write out a check and wait for it to clear? Just curious, I think it would be fun to walk in there with that much money and put it down on counter, point and say, "I want that one, please!"

Of course I would probably wear a suit to make it look like I was some young kid who just hit it big in Vegas.

I wrote a check. The salesman was a bit taken back that I didn't want to discuss financing options as I was pulling out my pen and checkbook.

[DRILLINDK]

I paid with a personal check. I wouldn't trust myself with a wad of cash. I'd probably leave on a public park bench or at the checkout lane at the grocery store.

[Like2Plan]

I'm not sure you could pay with cash (ie a wheelbarrow full of dollar bills) without some extra paperwork. I believe the dealship would have special reporting requirements at the $10,000.00 cash level. FAQs Regarding Reporting Cash Payments of Over $10,000 (Form 8300)


Reporting cash transactions over 10,000

Bank Secrecy Act

[gf1723]

In the next 3-4 years I plan to pay cash for a replacement car if my vehicle makes it that long. I think I'm going to start setting aside maybe $150 per paycheck (I get paid every two weeks), which should equal out to $3600 per year. That means in 3 years I'll have a little over $10k for a replacement car. Think this is a good enough amount?

[cypher1]

I'm assuming this was more for dealership situation. But the most I paid cash up front was 10k for a friend's car. If I'm buying a car from private seller and offer cash right there, it definitely helps close the deal. Otherwise I'd understand if others do personal/certified check, money order, etc. Same for selling, although I wouldn't do personal check.

[feh]

The last two cars we bought were for cash, and we wrote a personal check each time.

Might be buying another one sooner than I had thought - our 12 year old Outback got crunched on my drive home yesterday.

[gf1723]

The last two cars we bought were for cash, and we wrote a personal check each time.

Might be buying another one sooner than I had thought - our 12 year old Outback got crunched on my drive home yesterday.

Sorry to hear that, hope everyone involved was ok!

[dfeucht]

I do not buy this argument. Driving and financial habbits have nothing in common.

As an actuary (albeit not a property and casualty actuary) I can guarantee you that the correlation between credit score/history and driving record exists or else the pricing difference wouldn't exist.

To answer the question of this forum, I wrote a $22,000 check once - for some reason writing the personal check was extremely painful - even moreso than than the certified check that was used for our house which was more.

[disneysteve]

I really do not understand what it has to do with getting cheaper rates on insurance, but I can see where it gives some indication of trustworthiness.

I do not buy this argument. Driving and financial habbits have nothing in common.

As an actuary (albeit not a property and casualty actuary) I can guarantee you that the correlation between credit score/history and driving record exists or else the pricing difference wouldn't exist.

It isn't just driving record, it is claims risk. People who are doing better financially are less likely to file claims for every little thing. I realize that a high credit score doesn't necessarily mean that you are well off but a low score tends to come with financial problems and/or irresponsibility. Who would you rather insure?

[maat55]

It isn't just driving record, it is claims risk. People who are doing better financially are less likely to file claims for every little thing. I realize that a high credit score doesn't necessarily mean that you are well off but a low score tends to come with financial problems and/or irresponsibility. Who would you rather insure?

Actually, it would never cross my mind what someones credit score is when selling them auto insurance. If they have a good driving record and pay on time, what's the fuss?

[disneysteve]

If they have a good driving record and pay on time, what's the fuss?

You (the insurance agent) aren't just concerned with their driving record. You are concerned with their likelihood of filing claims. That's where the credit score comes in. Let's say two applicants have identical driving records but one has a 600 FICO and the other has an 800 FICO. They both get policies with a $500 deductible and both incur damages of $800 to their vehicles. Statistically, the person with the low score is more likely to file a claim for the $300 difference. The one with the high score is more likely to pay that cost out of pocket and not file a claim.