@Anonymous wrote:
A lot of the experts say you should never pay cash for a car - at least not at the dealership. Reason - most of their profit is made at the F&I desk (Finance and Insurance) so if you cut that desk out the salesperson will simply increase the cost of the car to make up for the lost F&I profits. If you have the cash for the car, I would suggest letting the dealer do the financing and when the first payment is due, pay them all, meaning pay off the car.
Here's the math: I bought a new car last week. I had the cash in the bank. By letting the dealer finance the car, the dealer gave me a $500 Finance Bonus ($500 off for using their finance company) which I would not have "qualified for" as a cash buyer. Here's how the math rolled out for me:
Cost of Car $26,090
Less Extras I refused to pay for (remove the extra or not, I'm not buying it) -$521
Less Finance Bonus -$500
Less Trade in -$8,000
Less cash down -$3,000
Less Manufacturers Rebate -$4,000
Plus Doc Fee +$489
Plus Sales Tax +$1137
Plus AZ License Fees +$472
Amount Financed $12,167
Loan Term: 36 months
Interest Rate 3.99%
Interest to be paid when I pay off the loan at payment #1 - $33.46
So a $500 discount cost me $33. Pay cash and there is no $500 discount. This is an actual car deal I bought on a 2020 Buick Encore in Tucson AZ on 22 June 2020. Here is a link to where a car guy explains this: https://www.youtube.com/watch?v=0S9cQOPxzfg
Two thoughts on this (and why I'm still going to be a cash buyer):
1. We also live in the age of the Internet. If I'm buying a used car, I can research in advance of ever stepping foot into a dealership. I know the asking price for a car at every dealership within 500 miles of here and know what the fair price for the car is. I don't react to high-pressure sales tactics, and am quite happy to walk in, ask for the exact car I came to see, make a take-it-or-leave-it offer, and walk if they don't want to deal. They'll try a few things, but as soon as they see you're really ready to walk, they'll usually come around and present at least a competitive offer.
2. IME, prices for new cars/custom orders are pretty much non-negotiable. You can sometimes wrangle a slight discount if they can find the exact configuration/color/etc already on a lot somewhere, but more often than not the prices are being set by the manufacturer. You can get the usual loyalty/ED discounts/promotions applied, but someone like a BMW or Porsche isn't going to haggle on the cost for the navigation package or the upgraded rims on that new car build.
