Good Buy or No?

now you're just being funny. But I hear what you're saying

 

are you trying to say just bring a blank check?

 

A check? What the hell is a check? Do you have to get an archeology degree and dig them out with other fossils?

Ok, humor over
I negotiate for a living. Well not nothing but negotiate but it's a big part of my job. I'm a real estate Broker, have been for... 15 years. Money is money to the seller. It doesn't matter HOW you offer to pay, it's exactly the same to them. Expecting a better deal for paying cash is a lot like expecting a better deal because my $20 I'm about to hand you has a specific serial number on it. It doesn't matter, at all. A 20 is a 20. Hand me a 20, it's $20. Write me a check for $20, it's $20. Pay me by credit card it's LESS than $20, one of the reasons dealers won't let you buy a car on a credit card.

So let's negotiate. I'll use the sellers side on a house to start, to show how people screw themselves and then move to vehicles. And I'll use 1 specific example because I've seen it play out exactly the same way a LOT.

Seller has a house for sale for $200,000. A full price offer comes in, it's an FHA mortgage, Buyer discloses they are putting down the bare minimum and are asking for the Seller to pay closing costs. We do the math and see the actual offer is only $188,000 CASH to the Seller. The Seller then has to decide does he take this offer or decline it. Usually, this is a pretty good offer, it's often accepted.

Vs.

Another Buyer submits another offer, but asks for NO closing costs. We do the math and find it nets the seller an identical $188,000. We have 2 offers to choose from, the net is the same. It's up to the Seller to decide which one is less risky of the 2, assuming the $188,000 is an acceptable net to them. We will never know if Buyer 1 actually NEEDS his closing costs paid. It doesn't matter. Both offers, assuming no other terms to show a difference in risk, are identical. The only only number of importance is the NET, which is identical. Coin toss.

Both offers result in a CASH payment to the Seller. He's not getting monthly stipends, he's paid in full at closing.

Vs.

Seller has a house for sale for $200,000 and has only received a CASH offer with a net of $188,000. Seller says "Why should I come done $12,000? They OBVIOUSLY have enough money to buy the house. Let's counter at $198,000." Congrats you just screwed yourself. You went to school without pants or underwear and now none of the cheerleaders will date you. NEVER OFFER CASH. Unless you have to If you know you have a competing offer that nets the same as your cash offer, offer cash. The risk is lower with a cash offer (no appraisals, no surprises on the buyers credit etc). The net is the same, the risk is lower, go with the lower risk. So 1 time, you can offer cash. Or you're buying a house that won't qualify for any lending, then you have to offer cash. So twice, and only twice... except Anyway, for most deals, don't offer cash.

Let's move on to cars and why this time you really never offer cash when dealing with a dealer. Never never never.

It's all about $. Their money, not your money. You have money, they're going to take it from you and make it their money.

What many people see is "I'll show them I'm serious" is in fact a big billboard with flashing lights that says "I'm a sucker, please abuse me." They're a car dealer they DON'T CARE if you're serious or not. It's about money, nothing else.

So you see a car on the lot for $10,000, you walk in with a wad of cash (to show you're serious) and offer $9k CASH!. And they tell you no. The car is 10k. You obviously have the money(you just showed it to them), everyone has money. It's all identical to them (serial number be damned). But they have the car that you have convinced yourself you MUST HAVE. They have all the aces in the deck, you've got a couple 2's and a 7. All they have to do is wait you out, let you negotiate against yourself and you'll end up with a 'deal' of maybe a $100 off sticker. While you're having an existential crisis, they're hitting on your wife and got her number too. Or you walk, and someone else buys the car. They don't care. It's all money.

Or let's do it the RIGHT way. You finance. You ALWAYS finance. You always finance EVERY PENNY you can, only put down what you absolutely must. And YOU ALWAYS FINANCE WITH THE DEALER. Never go to your bank. Always use the dealer. So you find your car, you talk to the salesman (I suggest a course of antibiotics first) and you offer 9k. They ask if you need financing, you say OMG YES! Can I do it here or do I need to go to my bank?

The offer goes back to the manager, he counters, you go back and forth but stick to your guns. Don't budge. Every time they come back with a different number you say no. Every time they start a sentence with "Don't you agree" or "Do you see the value of..." your response is I don't care. Those exact words "I don't care..." And eventually they will come out and shake your hand, and you start filling out the finance paperwork. Congrats you just negotiated a good deal.

BUT WAIT! You cry into the night... what about interest? I DON'T WANT TO PAAAAAAAAAY INTEREST! And you don't. The day after the financing goes through you send in full payment. No interest, you might pay a couple bucks but you saved a grand. And you did it by letting the dealer negotiate against himself. Big NEVER. Never negotiate against yourself.

Dealers make more money off of you financing than off of you paying cash. If you pay 10k cash for a 10k car, they make 10k and that's all they make, ever, off that deal. If you finance 10k for a 10k car, they make a whole lot more. Which means they can sell the car for quite a bit less than 10, and still make more than 10. If you're buying a new car, they get paid when they sell the car, they get their markup, they get the manufacturer incentives, and then they get the financing on top of that. It's like putting a cherry on top of the whip cream on top of the stripper sunday they got for their birthday. It's a lot of money. They can sell for a LOT less, and still make MORE money, if you finance through them. But there's exactly nothing that says you have to pay monthly. Kill the financing the next day, you've got a good deal and you knocked off not only the cherry, but some of the whip cream, and at least got a strippers phone number to boot.

Negotiation DOESN'T have to be a 2 way street. Nothing says I have to meet you part way. It takes a while, but I can make you walk aaaaaall the way to where I'm sitting. Not always, but often enough. I just bought my wife a new car, we ended up way below dealer invoice. It took 4 hours of sitting there and I said "I don't care" a LOT, but we got there It's a long story. It's an epic story worthy of a movie (starring myself as Liam Niessen and OJ Simpson as Ruth Bader Ginsberg) but I won't make this post any longer.

TLDR? NEVER OFFER CASH!

 

i still write a check yearly to the DMV to renew my plates!

 

This is exactly what happened to me. I have very short credit history, so obviously very low credit score. Dealer wanted for the truck $17.5k and 5 hours later we settled on 14k with the condition that the dealer will find me a financing for the full amount minus $500 down payment.

Two weeks later I got a call from financing manager they they did not find anyone who would give me the loan that was promised. In 5 minutes we made a solution that I give additional 1k down and he drops the price by another 2k. That was enough to get me financed on terms that we originally agreed. I was so pissed. I spent 5 hours negotiating the price playing "good salesrep, bad manager" game for the last couple hundreds dollars, and that Financing manager took 2k of the price in 5 min phone call.

 

So you're saying to borrow money from people to pay for things? That's just nonsense. Unless you want to be a slave to a lender.

 

You have all the power with cash. Never fails.

 

i think @Indy point was that you have the cash to pay it off as soon as you get a better deal through financing from the dealer
it makes sense to me anyways

 

In my experience, paying with cash gives you the opportunity to get the best deal period. It is never a good deal when its financed. If they finance it, it can always be better bought cash. But if it makes sense to you, that's what matters with your money.

 

my truck had a rather large finance rate iirc
large by today's standards anyways, almost double probably!

 

I like to buy wholesale when I can. Always seem to get a better deal than a regular stealership. That's how I purchased my 2003 back in 2009 or 2010, can't remember, but they would only come off their asking price of about 1k.

 

You have no power with cash. None, nada, zip. You pay more, every single time. You don't have to convince them to take your money. It's their job to take as much of your money as they can. The goal is to spend as little as possible. At least that's my personal goal.

 

Hahahaha this is the craziest thing I've ever read.. If it flys, drives, fucks or floats; lease it or buy it cash. Plain and simple. Noone ever got rich borrowing money on something that loses value.

Good luck thinking otherwise.

 

Then you leave. You simple CAN NOT beat the lender. It never happens. That's like saying you're making your money on a credit card with your airline miles. Its simply not the case.

 

It's also a rookie mistake to show your cards and let them know you are bargaining with cash. But you should seal the deal with it. That's the power.

 

So you're actually arguing that spending 10k today is cheaper than spending 8k tomorrow?

 

I dont see how you got that. I dont think you understand your logic. You're telling someone to finance something? Meaning you're suggesting they borrow money. Am I wrong? If that's the case, THEYRE OVERPAYING.

 

I suggest you read what I've written vs what you feel like you're arguing against. They way to have a conversation is to be listen to what is being said, not just wait to argue.

What is being argued for is 100% the most expensive way to buy a new car from a dealer.

I negotiate around with 19 mill a year, every year, for over a decade. I'm not exactly making things up.

I've given black and white statements. I've given strategy I've given the reason behind the strategy. And a I've given personal examples. And its all strategy I use to save people tens of thousands in a deal. Short of hitting you in the face with a large dead fish, I'm kinda if out of options at this point.

 

So at the end of the day, CASH still rules.

 

you could try the two strategies at two different dealers for the same type of vehicle.
be the guinea pig!