not sure if this is the right section for this or not, but i was wondering if anyone on here has paid cash for a car, or is thinking about it. I think i'm going to have to seeing as how i don't have any credit and don't know anyone who is willing to co-sign. the thing is that i probably won't have the cash to pay for it until a couple of weeks at least, but i would like to put in an order as soon as possible, so i don't have to wait any longer to actually have the car in my possession (my car is on it's last legs and i need a new car.. months ago). So yeh, can i actually start negotiations now and put some measly down payment on it and then pay it in full a few weeks down the line when i have the money and the car is actually in? I guess this is the kind of thing i should be talking to a dealer about, but i've heard that letting a dealer know up front how you plan to pay for a car could put a serious damper on trying to haggle down the price. any information is much appreciated.

thanks,
dirk

 

If you tell the dealer that you're paying cash it eliminates some of the possible games they can play with you. They can't lowball you on your trade in and they can't play games with the interest rate or length of your loan if you don't finance. I think being in a position to pay cash is probably the strongest bargaining position because all you are negotiating is the price of the car. However, from my experience, dealers are more willing to go down in price on an automobile they have in-stock that they could sell RIGHT NOW. You might want to wait the two weeks to get the cash. In the meantime there's nothing stopping you from test driving TSXs to your hearts content. Gook luck with your purchase.

 

yes. The normal way it works is you give them something when you agree to the price (I'd say 100-200, but, some dealer try to get more), and then, when you go to pick up the car, you have to give them the rest.

 

thanks for the speedy and informative replies. I know that paying in cash puts me in the best bargaining position. but not if they know haha because like you said, it eliminates all their lowball tactics.. i might just go to one dealer and ask them a bunch of questions about paying cash so i know how the process works and then use that knowledge to get what i want from a different dealer.. waiting til i actually have the money is a good suggestion too. but like i said, i just don't want to have to wait a few weeks for the money, then go and order the car and wait anotehr few weeks - months. you don't understand the condition of the car i'm driving now; it needs a new starter, a new ignition tumbler, and i've been driving on a blown cylinder for almost a month now

 

paid cash...it was nice negotiating w/the dealer

at least when i did it, all i had to pay was $1000 for the deposit, and then when the car came in, paid the rest

 

did you tell the dealer up front you were paying cash? if so, did it hurt or help the negotiations?

 

I too was planning to save up enough cash to buy TSX outright around March 2004. Well, things happend and I ended up needing to purchase the car in late 2003. (I had saved up about 85% of the cost of the car to that point.) So I put down about about half of the cost and financed the other half. Every month I've been paying up massive amounts of the car loan and hope to pay it off within 6 months, instead of the original 5 years of the loan.

The cheapest way to owning a car is to buy it outright. If you are close but not there yet, finance the minimum amount to get you there.

Even if you don't have much credit history (as I believe you are implying), if you are putting down enough money, I am sure you won't have a problem getting financing. Only thing is no credit history means higher interest rate. But since you've got most of the cash anyways you can just pay it off fast and avoid paying most of the interst (Just make sure the loan you are getting does not penalize you for paying it off early).

As far as getting better deals paying cash vs financing, I don't think it matters to the dealership. Whether they get the cash from you or from the bank, they will get the same amount pretty much at the same time. In fact, if you finance through the dealership, they have the potential to make more money from the interest so they might like that better. G'luck on your purchase and keep us informed how things turn out.

 

I've paid cash for every car I ever owned. I usually start saving for a new car right after I buy one. And, then I don't buy again until I have the money in the bank to pay for it.

Anyway, I always tell the salesperson that I want to agree to numbers on the trade-in and new car BEFORE we talk fiancing. That way, the salesperson negotiates with me expecting to make a few $ on fiancing. After the deal is all set, I then telll the salesperson that I don't want to finance. Usually, I get leaned on my the buisness guy at the end fo the deal, but it generally works out.

 

I'd have to agree with whatchamcallit on what he said about just negotiating up front. Whether you're paying cash or financing really doesn't matter to most dealers. A dealer is going to get the money within 48 hours from a lender if you get a loan, and your check won't clear that quickly (in about 72 hours). The other thing you can do is sit and spend a little time with their F&I manager at the store. After taking the time to fill out an app, they go over your file with a couple of lenders to help get you started in a preliminary deal. They can go over your options of what you can do, even if you have a limited credit history, and maybe help keep a little money in your pocket while establishing your car-buying credit. With enough of an equity position up-front, a lot of lenders will be very accomodating to help have a buyer get established. They'll always want to ensure that there will be another buyer out there in the future. You may have to eat a little bit of rate, but having a good payment history on a car purchase can do a great deal of good for you in the long run that paying cash can never do. Just my $.02.

 

Wow, so you offer marriage to a car dealer? (sorry)

Let me add one other perspective. Dealers make money from the financing - usually an upfront commission, plus they pad the interest rate to create a spread that also nets them profit.

I bought a pickup truck last year. I wanted the cheapest possible full size truck I could get (no carpet, bench seat, stick) and I was planning to pay cash. Through a chain of events I won't go into, I was able to get a 21k truck plus spray in bedliner for 13k ish. The salesman begged me to a) finance it with them and b) not beat him up on the rate so he could make back some money on the deal. I said "sure" knowing I would pay it off before long.

Second perspective, I recently bought a car and wanted to put down around 75% in cash and finance the rest. The F&I person was very good and got me an EXCELLENT interest rate so I decided to finance a lot more (cheaply) and keep the cash in the bank (CDs) to give me flexibility.

As a car is a secured asset, I would encourage the original poster to try to finance at least some of the cost for the reasons pointed out by my fellow Austinite here.

C.

 

Well, the market for some hot-selling cars is competitive and you do have to go that extra yard......

 

well, i don't really think financing is an option for me.. i literally have NO credit. I have never owned a credit card, i have a debit card that i make most of my purchases from, but seeing as how it comes out of my bank account, it doesn't count as credit. I have bills and pay those, but I don't believe they count all that much... My work history is pretty sketchy as well. Unless what someone said earlier is true: where they can offer you financing even if you have no credit, but then i would have to take an extremely high interest rate, right?

 

Generally, if you put down more than half the value of the car, you won't have much trouble finding a lender. The reason being, if you default on the loan, at worst the lending bank can repossess "your" car, sell it, take their share, and give you whatever is leftover. (Banks worry more about people who default on the loan and the value of the car is lower than the loan amount, in which case they would risk losing money).

Having sketchy work history might make the situation more interesting but I think the IRS would be more interested in that sorta thing than the bank would. Maybe some of the sales people within this community might be better equipped at answering these questions with certainty.

Also, as far as having high interest rate, I took a $10K loan for my Mazda earlier in the year at (4.99% APR) and paid it off within 4 months. The amount of money I lost to interest: whopping $75

 

told him up front....not sure if it helped or not. but i did get a lot of stuff thrown in....but it could also be because i was telling him about this so called great deal i had from another dealer.

 

First off, I paid full cash for my TSX. This gives me superior control over my cash flow since rather than making car payments, I can use that money to invest and save for my next car or big purchase.

If you have no credit, then establish credit. Do that by saving your money and making a large down payment--like 75%. Then, the lender and dealer should not be so squirmy about extending credit to you for the balance. Most importantly, pay off that balance due ASAP--sooner than the terms of the loan. Try for paying a 2 year loan in 6 - 12 months. Sure, you'll pay interest in that time frame, but you are most importantly establishing credit.

 

Like I and others have said: Would you rather continue to have no credit, or get yourself established? That's really all it comes down to. Or you can choose the alternative. Put all your money into paying cash for it, take your chances on not maintaining any liquidity while ignoring an opportunity to secure a better financial future by ensuring a stronger financial portfolio, and dumping all your hard-earned money into this purchase. What are you going to say to yourself 3 years from now when you want to go buy a little nicer car, or get a house and you still have NO credit? You'll kick yourself, I'll assure you. Thnk about it. I don't post things on here as advice if I wouldn't stand behind them with a serious level of assurance. I would not offer advice (or even handle this type of situation as if you were a customer), if I didn't take every opportunity to imagine that I was offering this up to, say someone like, my mother. That's just the way I do business. I know it's different, but that's one person that tries to make a difference. Take my advice seriously. I don't just go trolling around looking to kill time by posting messages like these. I'm doing it with an intent that is one to benefit others. You're one of them.

 

At an earlier point in my life, I had bad credit. I accomplished this by continually being late on credit card payments. Anyway, I got eventually cancelled all my credit cards (I was young and stupid) and when it later came time to get credit, nobody would give me the time of day. So, I got myself a secured credit card, reestablished my credit, and never made another late payment. I have no trouble with credit now, just pre-qualified for a morgage last month, and have a very high credit score.

Anyway, the point is, credit is important and there are ways to establish it other than taking out loans. But, there will come a point in your life when you want to borrow for some important purchase.