WHY WE SAY DON’T SAY I’M PAYING CASH!

CAR BUYERS: DON’T SAY I’M PAYING CASH!

Why a Car Buyer shouldn’t say, “I’m Paying Cash!” at a Car Dealership

When buying a car, because of the business model most dealers use, it’s generally advised not to reveal to the dealership that you’re paying with cash upfront for many of the following reasons:

• Loss of Your Negotiating Leverage: Car dealerships often make a significant profit from financing. If they know you’re paying in cash, they are very likely to be less willing to negotiate on the price of the vehicle because they’re losing out on the potential profit from a financing deal.
• Keep the Focus on Total Price: By not disclosing your payment method, you can keep the negotiation focused on the total price of the car rather than how you’ll be paying for it. This can help you get a better deal on the overall cost of the vehicle. If a dealer constantly pushes you with “How do you plan to Pay?” You should answer the question by saying, “If we can agree on a Price I’m willing to Pay, I’ll be interested in what the Finance office has to offer.”
• Dealership Incentives: Dealers may have incentives or bonuses tied to their financing deals. Knowing you won’t be financing through them could make them less inclined to offer you discounts or extra incentives.
• Up-selling Financing Products: If the dealer assumes you’re financing, they might be more inclined to offer discounts on the car itself, hoping to make up the difference with interest or added fees in the financing package. So, the bottom line MUST come before you talk about CASH.
• Once the price is negotiated, revealing a cash payment can avoid these extra costs.
• Avoiding Unnecessary Extras: Dealerships often use the financing process to up-sell additional products like extended warranties or service plans. If they know you’re paying cash, they might push these extras harder during the sales process to offset lost profits in finance.
• Psychological Advantage: Keeping your payment method to yourself can give you a psychological advantage in negotiations. The dealer doesn’t know your limits or constraints, which might lead to a better offer from them. Negotiating a Price with a dealer is a bit of a guessing game. The dealer is trying to guess at what price or payment you’ll bite, so it’s only fair in turn that you keep them guessing how you’ll pay.

It’s important to remember, however, that every car buying situation is unique. In some cases, if a dealership is offering a significant cash discount (and they could be), it might be beneficial to reveal that you’re paying cash. The fact remains that it’s always key to first negotiate the best possible PRICE on the vehicle, before discussing your PAYMENT preferences.