Cash is king at car dealers

[Scanner]

I just read an article that the auto dealers can't get easy financing any more and therefore some are closing or taking big hits.

I am wondering if I should really low-ball on a minivan now. Like offer $5000 on a 10K car.

It's funny - you used to be crap at the car dealer if you paid cash because they made money when you financed.

Now, they'll be begging for your business.

[MonkeyMama]

That is pretty interesting.

We have always paid cash and been treated very poorly by car dealers. Last time we financed a small amount and repaid it immediately. Difference was night and day - but we had much more bargaining power since we took their financing. We can play their game...

Anyway, I have a long list of car dealers I would never do business with based on the way they were treated last we were looking with cash. I mean they simply did NOT want our business. At all.

They have got their wish. Sucks for them!

[disneysteve]

When we've shopped for cars, I've never told them how I planned to pay until AFTER we had agreed on the price of the car. I didn't want the negotiation influenced by how I would be paying.

[Joan.of.the.Arch]

I heard one of the biggest dealers in the country is closing. I think in the Orlando area. Hundreds of people are losing their jobs due to the closing.

[red92s]

I heard one of the biggest dealers in the country is closing. I think in the Orlando area. Hundreds of people are losing their jobs due to the closing.

If you are referring to Bill Heard Chevy (who is closing large dealerships in many states), their situation is not a victim of the credit crunch and gas prices. There are literally hundreds of formal complaints against them for dishonest business practices. There are articles about them repossessing cars when they realized a salesperson had made too good of a deal. People put deposits on cars, return and their car is sold, and they are not able to get their deposit returned without buying another vehicle. As a final blow, they were caught fudging paperwork going to GMAC.

[boosami]

When we've shopped for cars, I've never told them how I planned to pay until AFTER we had agreed on the price of the car. I didn't want the negotiation influenced by how I would be paying.

This is the best advice for paying cash at a car dealer! It can be difficult though. They try to make you talk about "how much you can afford per month" and will do anything they can to not tell you what the selling price of the car will be, since they will change it at will. You might negotiate the monthly price from $350 down to $300, but be paying a higher overall cost because of the creative financing.

Walking in with a pre-approved loan check is the same to the dealer as paying cash. Find out the price of the car, then whip out the check or cash at the last minute.

[disneysteve]

They try to make you talk about "how much you can afford per month" and will do anything they can to not tell you what the selling price of the car will be, since they will change it at will. You might negotiate the monthly price from $350 down to $300, but be paying a higher overall cost because of the creative financing.

You should NEVER have any discussion about what you want your monthly payments to be. You should NEVER "negotiate the monthly price" in any way.

If the salesman asks, "How much do you want your payments to be?" or ,"How much can you afford each month?" your response should be, "Let's just talk about the price of the car." If he is unwilling to negotiate price, get up and walk out.

[boosami]

Good site with the top 10 car dealer tricks: CarBuyingTips.com - Annual Top 10 Car Dealer Scams Alert List

Some of this stuff is practically criminal, yet it happens daily at dealerships. It's a good read for anyone thinking about buying a car.

[Abiqua]

You can also buy a car through fleet sales. The fleet department is supposed to be for selling to businesses, but in many cases they can sell to the public, too, but they're not allowed to advertise that because they don't want to compete with the retail salesmen. But with the fleet department you can negotiate by fax. Read up on it. I'd post a link but I can't yet so do a google search for "how to buy car fleet" and you'll find good resources.

[tripods68]

Similar article:

"Credit not only enables most U.S. consumers to purchase automobiles – only about 5 percent to 15 percent of new-vehicle buyers pay in cash, depending on the average cost of a given dealership's inventory – it allows dealerships to manage inventory."

Business - Credit crunch hits capital region auto dealers - sacbee.com

Believe or not, paying CASH for vehicle provides little or no incentives to the car dearlerships since CASH hardly provides liquidity to fund their operations. Car dearlership makes money through financing using their own preferred financing arms like GMAC Financing, Toyota Financing, selling cars at full MSRP or Premium, extended warranties, servicing/repairs, parts/labors.

It doesn't hurt to negotiate with the dealership as long you are negotiating in "good faith". Believe or not, they are there to make money. Dealership knows exactly how much their holding inventory cost, break even point/losses (info buyers aren't privy) and so they will always start higher price to start with (usually above MSRP), unless you come prepared well in advance. The key in negotiating process (I myself have tons of experience in this field), dealership knows your level of experience/intelligence, and research by the way you speak. Therefore, you always want to be prepared beforehand and during negotiation process without revealing your own knowledge. Revealing the deck of cards does not give you much leverage. Know exactly how much you are willing to buy/afford for a specific model that includes all options you want by running different pricing scenarios that includes docs fees and taxes (Edmunds.com). You also want to take advantage of certain models thats offers Rebates or Cashback/Dealer Cash Back. Those gives buyers automatic vantage point and they are more "able and willing" (at Invoice price or below) sellers to get the prices people are willing to buy.

For instance, SUVs/minivans offers the greatest incentives of car buying experience today cause by higher fuel prices. As such, Hybrids have the fastest turnover ratio (5 days or less) cause by higher demand in MPG. But you already know

[noppenbd]

Similar article:

"Credit not only enables most U.S. consumers to purchase automobiles – only about 5 percent to 15 percent of new-vehicle buyers pay in cash, depending on the average cost of a given dealership's inventory – it allows dealerships to manage inventory."

Business - Credit crunch hits capital region auto dealers - sacbee.com

Believe or not, paying CASH for vehicle provides little or no incentives to the car dearlerships since CASH hardly provides liquidity to fund their operations. Car dearlership makes money through financing using their own preferred financing arms like GMAC Financing, Toyota Financing, selling cars at full MSRP or Premium, extended warranties, servicing/repairs, parts/labors.

I think you are misinterpreting the article. The article is saying that the dealerships (especially independent dealerships) need their own credit in order to keep inventory on hand. Believe me, if you went into a dealership right now they would be ecstatic if you told them you were ready to pay cash, because they are having to turn away people who want to buy because they can't arrange the financing. I agree that in normal times they would prefer to have you finance since they would make money on that. But these are not normal times.

[tripods68]

Noppenbd,

I wasn't interpreting what the articles was saying or how difficult independent dealership are having in today's credit squeeze.


I was referring Scanner's originally comment that Cash is King. I'm saying CASH is not KING when it comes to secure the best deal for buyers today unless you do your own research first based on my own experience. You can agree or disagree. Perhaps I didn't do a good job explaining that for which i apologized. Nevertheless, I agree CASH is King for individual buyers if they have the money to purchase a car that saved financing cost.

[disgruntable]

I negotiated the price on both cars I bought last year before I discussed how I was going to pay for it (cash). I was satisfied with the deal I got.

I did make the mistake of trading in one of my old cars to the dealer. I just wanted it off my hands. I'm sure that was a pretty costly mistake.

[Johansen8]

Cash is King and customer is queen.

[Yoursavingcoach]

You Are Right, Cash Is King

Cash can also mean you have a loan ready from your local credit union too.

Keep one thing in mind when you make offers on cars. Always be prepared to walk away from the deal if it's not going your way.

I used to work at a dealership and I know they panic when you threaten to walk.

Stick to your guns on your offer. If they can play hard ball, why can't you?