How Low Can You Negotiate for a Used Car When Paying Cash?
Contrary to what some buyers may believe, used car dealers don’t accept a lower price for vehicles when the customer is paying cash. The form of payment makes no difference in a sale.
Also, most private sellers accept cash for payment only because of the risk that check payment may present.
Before negotiating a lower price for a used car, understand why dealers prefer financing over cash payments and how to get a better deal, regardless of how you pay.
Financing Is More Profitable for Dealers
If a dealership handles your financing, it receives payment as an electronic transfer within days, which is basically the same as cash.
Also, a dealer makes a profit for using a certain bank, whether it is by marking up your interest rate or just choosing to use the bank for a finance application over others.
Even credit unions, which don’t usually allow rate increases for dealer profit, offer a dealership a flat fee. For these reasons, cash purchases do not gain a better price.
Used Car Discounts
A private seller may price a used vehicle high and negotiate, and a dealer may do the same. However, discounts vary by seller and car. Dealerships often purchase inventory from customers who trade in, and then put the vehicle through a shop to repair it or perform maintenance.
So the car’s value to a dealer varies by vehicle.
No set discount amounts exist, as sellers own each car for a different amount. Also, private sellers may need to make a certain amount on the sale, perhaps to pay off a car loan or to purchase another vehicle.
Some people may believe that a dealership can somehow hide a cash purchase or keep a portion of it instead of reporting it as income. This is not true. It is highly unlikely that you will find a sales manager who would risk losing his job to sell a car.
In addition, buyers are unlikely to sign paperwork declaring they spent less for a car than they really did. This would limit a buyer’s recourse if the car had problems or had to be returned.
Alternative Negotiation Technique
A better way to receive a discount is to offer to purchase the vehicle immediately. If you’re purchasing from a dealership and you have cash, you can offer to buy the car that day, which will give you more negotiating power.
You can tell the dealer that you will leave with the vehicle if he can meet your price, and you can discuss any counteroffers before deciding. A private seller may also take less for a car if you offer to purchase it immediately.