Buying a Used car with cash

[Shoe]

If your buying through a dealer, you can get a better deal by financing than paying cash. If you want to pay it off right away, just pay off your loan in full a month later. You still have essentially paid with cash but got a better overall deal. (Just make sure to read the fine print and make sure the loan does not have any pre-payment penalties).

Invest the excess savings in NTDOY.

[Jimbo]

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Jimbo,

Word. How much of a discount would you push through for a guy getting financing there? 2%?

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Thremp,

The problem is that every used car and dealer is an independent entity. One car may be fresh on the lot, a low mileage one owner creampuff. Another sitting right next to it might be almost 90 days on the lot and still a good car but for whatever reason is getting what we call "lot rot". Assuming both cars are equally valuable on paper you will get a much larger discount on the 90 day old unit compared to the fresh unit. Whether or not you pay cash or finance will not make any significant difference under these circumstances.

What i am trying to get across is that there is no firm and fast rule of you do this and we will offer you that discount. Used car sales just doesn't work that way, new car sales are different since all dealer have an identical cost basis on an identical auto.

Initially all I wanted you to understand that there is never an advantage to paying cash but often an advantage to financing from the dealers perspective. I supposer if you have terrible credit and cannot get financed that changes my reply but I was answering assuming the buyer had good credit and was not a deadbeat.


Jimbo

[prohornblower]

So if I understand you correctly...I should walk in, finance the car (likely through the dealer), then pay it off a couple days later?

Why would they just give me a discount for financing it? Am I supposed to be like "Yo, if I finance the car through you, I want a discount."?? I mean, almost everyone finances their car. Why would they give me a discount? How do I go about talking them down (especially at a "haggle-free" dealer like Carmax)?

If I tell them "Either I pay it in cash right now, or I finance it, but you give me a deal." they'll still assume I'm going to pay the loan off immediately anyway (which is the point), so why would they bother giving a deal?

Thanks for the help so far. [img]/images/graemlins/cool.gif[/img]

[Shoe]

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If I tell them "Either I pay it in cash right now, or I finance it, but you give me a deal." they'll still assume I'm going to pay the loan off immediately anyway (which is the point), so why would they bother giving a deal?


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They won't assume that. And even if they do, the salesman won't care because he will still get his cut (which will probably be better even if you finance it then payoff 3 days later).

If you can work their greed to make them think you are a sucker on the finance end of the deal, you can probably get them to bend on the price a little bit more. To do this, you probably don't want to go in saying you can pay in cash. Instead, be creative and find ways to play with the monthly payments/interest rates while lowering the overall purchase price.

[Thremp]

Jimbo,

I was more curious about new cars. Sorry for the confusion. I guess there still is some "shopping around" to do with vehicles.

pro,

Usually there is an early payment penalty. But you can almost always pay it off in 3 or 6 months.

[prohornblower]

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pro,

Usually there is an early payment penalty. But you can almost always pay it off in 3 or 6 months.

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Bah!! Sounds like a hassle. I'll likely just buy it and be done with it.

Thanks for all the help everyone.

[BradleyT]

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One thing for sure, you are very smart for buying used.

Anyone buying new that is on any kind of budget is throwing money away bigtime.

NEW cars depreciate 20-40% the minute you drive them off the lot and therefore buying new is one of the worst financial decisions anyone can make in their lifetimes.

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I couldn't be happier with my new car purchase. I had only bought used cars in the past and they ranged from 5-20 years old. Frequently these cars would get to the point where repair bills were $3,000 - $5,000 per year. That's about the same as a monthly payment - except I still had a piece of [censored] 5-20 year old car on my hands with something else ready to break in 2 months.

Maybe I've just had really bad luck but all the used cars I've owned there were always times when I'd wonder if they were going to A) start and B) get me to work - and many times they wouldn't do A or B.

But whatever, obviously YMMV (heh) with any car purchase.

[prohornblower]

Bradley,
I'm talking about like a 2004 Lincoln LS or Ford Taurus with 30K miles on it, for like 10-12 grand. There is huge value in these cars. With a V6, if you plan on keeping the car 'til 130K miles, that means you are buying 100 thousand miles for 10-12K, a huge value.

There is an excess of boring V6 sedans online that were used for car rentals for a year and a half then dumped.

Also, you can trick yourself. If you only like to buy new, and say your current car was bought new in 2001, well, if it's about done, you can get a used 2005, which is still 4 years newer than the current car you are driving. [img]/images/graemlins/smirk.gif[/img] I reminded my gf of this when she said she wants a new car. She currently drives a '96 truck.

[Shoe]

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NEW cars depreciate 20-40% the minute you drive them off the lot and therefore buying new is one of the worst financial decisions anyone can make in their lifetimes.

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I disagree with this. I would instead say that any car you buy, new or used, the dealer will only offer you 60-80% of what you just paid for it.

You still will be able to sell a new car to a 3rd party for extremely close to your purchase price, unless you way overpaid.

However, new cars do depreciate more over thier first 2-3 years than at any other time in their life cycle (obviously).

[AggroFish]

If you're at all mechanically inclined, or know someone that is, you'll generally do better with a private party then a typical used car lot. Private party's dont have a markup for overhead or comissioned sales sharks.

If you do go the lot route I'd really suggest sticking with established dealers offering some variation of certified preowned. That way you know the car has been gone through and the leaking radiator isnt cigarette filled. Another great outlet are places like budget who sell thier rentals.

Possibly it's the way I drive, but every car I've had starts falling apart between 75-100k miles. So, if I'm buying used I dont want anything with more than 30-40k miles.