Cash Payments and Your New Car Deal

Cash Payments and Your New Car Deal
  • Opening Intro -

    You are in the market for a new car and are in the envious position of having enough money available to pay cash for your car.

    Only one in 10 buyers is able to come up with the cash to buy a new vehicle outright, with the rest of the market relying on traditional car financing or car leasing to swing a deal.


Buying a new car has distinct advantages including giving you tremendous bargaining power. However, once you read through this discussion you may decide to hold on to your cash and finance your vehicle instead.

Cash or Not

You have the money to buy a car with cash, but should you? You may find that your dealer is more than willing to dangle zero percent financing in front of you, effectively allowing you to buy a car with no interest charged.

A no-interest car loan can be a good deal especially if you have your money invested and are getting a decent return. Typical bank CDs may only pay one or two percent, but money invested in stocks, bonds and annuities may be returning five, 10 percent or more. You may want to keep your money working for you rather than paying cash for a new car.

Dealer Price

Your new car dealer has a price in mind for the car that interests you. That price may be close to the manufacturer’s retail sticker price, but you know that you can save hundreds if not thousands of dollars more through smart research and negotiation.

Learn what the dealer paid for the car and make an offer close to that amount. Your dealer may cry poverty, but know that he is likely getting an incentive from the manufacturer, a secret rebate also known as a “dealer holdback” for selling that car. Find any vehicle’s dealer price by visiting commercial sites such as Edmunds or Kelly Blue Book where that information is revealed to you for a nominal fee.

Smart Negotiation

If you still plan to pay cash, approach your negotiation without revealing your intention. Simply find the vehicle you want, discover its retail price, learn what the dealer paid for it and find out what incentives are offered. For instance, if your car has an MSRP of $29,800 it may come with zero percent financing or $2,000 cash back. You will apply the manufacturer’s cash back offer to your final price.

Learn what the dealer paid for the car. For example, it may have cost him $26,400, suggesting a profit of $3,400 before the dealer’s expenses are included. On closer inspection you may learn that a $1,500 holdback incentive is offered by the manufacturer. Thus, if you were to offer the dealer $24,000 for the vehicle, he would still make a profit and you will save nearly $6,000 off of the sticker price. The dealer’s price can be found out by visiting a service such as for that information.

Why Not Cash?

You may still be able to get the price you want and interest-free financing if you play your cards right. It may seem odd that the car dealer is pushing the financing, but what you should know is that he is getting an extra incentive from the financing company to offer you a loan. Thus, you may be able to get your new car for $24,000, finance it for 60 months, avoid the interest charges and keep your investments working for you. It isn’t a scenario that always happens, but when you have cash to offer, your options are vastly improved over the person struggling to come up with a down payment. That’s the difference you should be aware of, enabling you to find a deal that others will simply envy.

See AlsoWhat You Should Know About New Car Leasing


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Categories: Autos Express

About Author

Matthew C. Keegan

Matt Keegan is a freelance writer and editor as well as publisher of "Matt's Musings", his personal blog. Matt covers campus, consumer, business and financial topics on various websites and blogs, and has been published in the "Houston Chronicle", "Sam's Club Magazine" and "Wisconsin Golfer".