Paying cash for used car

fdavisho

Hi, I'm new to car buying and am planning to purchase my first vehicle (used Volvo) in the next couple of months. I have done some research and generally, it seems that paying cash for a car is a bad idea when buying from a dealership, as it can drive the prices up since you aren't paying the extra from financing. However, I am strictly looking to buy a used vehicle, and wanted to know if offering to pay cash to a dealership (instead of financing) would give me any advantage in the price negotiation?

Michaell

fdavisho said:

Hi, I'm new to car buying and am planning to purchase my first vehicle (used Volvo) in the next couple of months. I have done some research and generally, it seems that paying cash for a car is a bad idea when buying from a dealership, as it can drive the prices up since you aren't paying the extra from financing. However, I am strictly looking to buy a used vehicle, and wanted to know if offering to pay cash to a dealership (instead of financing) would give me any advantage in the price negotiation?

Not necessarily. To the dealer, all deals are cash (either from you or from the bank).

You are correct that the dealer looks at the opportunity to finance your deal as a money maker, but given the low cost of borrowing, that may be a better use of your money.

How old a Volvo are you looking at? Depending on the model, the age, and the miles, you may want to budget for maintenance and repairs.

fdavisho

Thanks Michaell I'm looking at the 2013 S60 T5, almost 80k miles. I'm hoping to keep repairs to a minimum by buying a good-quality vehicle from the start, and doing routine maintenance. While it is true financing can be a better use if you can get a low enough rate, I'm really trying to avoid taking on any debt and would rather pay cash from the start

stickguy

that should not cost you too much, so paying cash is not a big deal. Might be different if you were getting something much newer and expensive.

in general though, you can just negotiate the car. When they ask you how you intend to pay, just say that you have not decided, and it will depend on what they can offer. But worry about that after you have already settled on the deal for the car.

one caveat is on new cars. Sometimes there is discount finance rate available, or a cash rebate instead, but you don't get both. So then you have to do some analysis to figure out what is better for you.

oldfarmer50

fdavisho said:

Hi, I'm new to car buying and am planning to purchase my first vehicle (used Volvo) in the next couple of months. I have done some research and generally, it seems that paying cash for a car is a bad idea when buying from a dealership, as it can drive the prices up since you aren't paying the extra from financing. However, I am strictly looking to buy a used vehicle, and wanted to know if offering to pay cash to a dealership (instead of financing) would give me any advantage in the price negotiation?

If you feel that financing will encourage a better deal you can do that and pay off the loan after 90 days. That gives the dealer his commission for booking the loan.

Make sure you have someone knowledgeable check out the car first though.