When people pay cash for a car..

[maat55]

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.

This is a legitimate argument. Yet, I find checking my credit score intrusive. Personally, I would rather do business with a company that does not use it as a consideration. I must confess, I have not shopped based on credit score considerations because mine is sufficient.

[disneysteve]

Personally, I would rather do business with a company that does not use it as a consideration.

And that is absolutely your right to do so. There is one company in this area that advertises that they don't look at your credit score - only your driving record. I don't know how their rates compare to companies that do include your score in their underwriting, but there are options for people who don't want their score figured into the equation.

[dfeucht]

And that is absolutely your right to do so. There is one company in this area that advertises that they don't look at your credit score - only your driving record. I don't know how their rates compare to companies that do include your score in their underwriting, but there are options for people who don't want their score figured into the equation.

All else being the same my bet is the rate is higher for high credit score people and possibly higher for those with lower credit scores as well as they MAY attract more people with lower credit scores.

Thanks DS for pointing out the financial half of why credit score can impact insurance rates.

[moneyclass]

..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.

dont wear a suit. wear sweat pants and a old shirt. walk in there looking poor so no one takes you serious. then say you want to buy this car then slap down all those 100s lol.

bet you that persons face will be in shock.

[thekid]

I've paid with a personal check at the dealers for new purchases and certified check for a private party transaction on used.

I'm car shopping now. When I ask a dealer about the cash purchase rebate, they keep telling me it's not worth it with the low rates (assuming I'm using a credit margin). Even after I explain that I'm not using outside financing, they don't seem to understand. It says alot about the population in general when salespeople can't believe that somebody wants to buy a car with money they have in the bank.

[mom-from-missouri]

Back in the dark ages, when I got my suburban, I played them, since they didn't seem to want cash. I did the financing because if I did, I got $1200 cash back.(dealer gave me 12 100 $ bills after I signed). Then, when GMAC sent me my coupon book, I paid it off in full on the first coupon.....And, came out $1200 ahead. And the first payment wasn't due for 60 days. I put my cash into a 60 day CD (don't know if they even have those now, at 3% interest)

GMAC called me, making sure that was what I was wanting to do...Really? Think I would write a check for that amount of money if I wasn't sure?? (I did make sure at signing time there was no fee or penalty if I paid off early)

[lendnotborrow]

I love the surprised look people give when you pay for big purchases in cash!! Society is so caught up with credit that we forget about the way they did it back in the day. PAY CASH .

[zetta]

Last time, we told the saleman that we wanted to nail down the total price before talking about financing details.

[disneysteve]

Last time, we told the saleman that we wanted to nail down the total price before talking about financing details.

Yep. Get the price in writing BEFORE discussing how you will be paying and BEFORE you discuss any trade-in vehicle.

I have also taken dealer financing only to turn around a short time later (within a month) and paid off the loan.

[thekid]

Yep. Get the price in writing BEFORE discussing how you will be paying and BEFORE you discuss any trade-in vehicle.

I have also taken dealer financing only to turn around a short time later (within a month) and paid off the loan.

Why is that?

Financing rebates will come from the manufacturer. They are publically available (on various independent sites, often even on the manufacturer's web site and you can ask the salesperson to show you the rebate list).

The manufacturer's rebates will be a given (they don't cost the dealer a penny). From there, you negociate the dealer's rebate.

[PaydayLoner]

Yep. Get the price in writing BEFORE discussing how you will be paying and BEFORE you discuss any trade-in vehicle.

I have also taken dealer financing only to turn around a short time later (within a month) and paid off the loan.

My parents pay "cash" (write a check, actually) when they buy a car, and they said the same thing, that dealers dislike losing the money on financing. But how do you keep the dealer from just offering less on the trade-in vehicle, if he's given what he thinks is too good a deal on the new car? Or do you mean that you might choose to sell the trade-in yourself, if the dealer doesn't offer enough? My parents hate to sell things themselves (live way out in the country so it's hard to get people to come look at things), so they know they're definitely going to be trading the old car in.

[thekid]

Dealers don't arrange for financing, manufacturers do. Dealers just offer the manufacturers financing. They don't make or lose money on it.

A dealer is actually indifferent to whether you pay cash or finance. However when the manufacturer offers special financing rates, they will often offer a rebate to those paying cash (which is somewhat equivalent to its low financing costs).

[MonkeyMama]

If you can hide how you are going to pay for a car - great. When your budget is $10k, and you refuse to pay more, it's pretty obvious you are a cash buyer. This is where we get stuck with the salesman. If you just financed it, you wouldn't care so much about the actual price. They want to negotiate monthly payments. We want to negotiate price. They can smell cash buyers pretty easily.

Ask any car sales person - they get a kickback if they can sell you the dealer financing. It's two-fold in that they get a bigger commission if they talk you into buying more vehicle.

Like I Said before - that was the last decade. I wouldn't be surprised if cash buyers were a little more wanted these days - if sales compensation has changed a bit.

We experimented when we bought our last vehicle - financed it at the dealership and paid it off the next day. More room for negotaition, and treated like royalty. For a $12k vehicle. In the future I will pay however they prefer and take the discount. Saved a lot of time and hassle. Versus really negative experiences with the same amount of cash in hand.

[thekid]

I just walk in knowing what the applicable manufacturer's cash purchase rebate is (and any other manufacturer rebates) and spend no time on those. All I do is negociate the dealers rebate that will be on top of that. Dealers mark up is generally in the 7%-10% range (more on more expensive models, less on cheaper). I usually want half of that. I buy from dealer that comes closer to that.

The most important thing is to seperate manufacturers rebates from dealers markup and to know the manufacturers rebates walking in. From there you take those (they are a gimme) and ask the dealer to lower his margin. I think you haved to know what you can get coming in and insist on getting it.

As for trade in, I wouldn't know. I've never traded in a vehicle (always sold seperately to a private party). The discount on FMV the dealer offers is too steep I find.

[MiikeB]

You can get a better price on the car if the dealer believes it will be financed because they will be able to get the profit they concede on the car back in the bonus they give for financing.

In some states the banks will only tell the dealer what the lowest APR they will give a loan for is. The dealer is allowed to offer you a higher APR, and if you sign on it they get to pocket the difference between the lowest one the bank would give and what you took. They are not obligated to tell you the bank was offering 3% if they get you to agree to 5%.