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Why You DO NOT Pay Cash at Car Dealership
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- čas přidán 18. 08. 2024
- In this video, we'll explore why paying cash for a car can be a smart financial decision and how it gives you more control over the dealership compared to buyers focused solely on monthly payments. However, we'll also reveal why announcing your cash payment upfront can actually work against you. Learn the strategies to keep the dealer in check and get the best deal possible. Don't miss these crucial tips for your next car purchase!
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Buying a Car Doesn't Have to Suck™
Just lie and say you’re gonna finance during negotiations, after price is finalized, drop the cash surprise. Dealers have no problem lying to us, therefore neither should we!
Or take the financing, pay off the vehicle within about 30 days, and the stealership loses their kickback from the finance source as well. READ YOUR CONTRACT.
Legally they can decline the deal. When I bought my Harley they wanted to finance. In fact they would not accept cash unless I paid sticker price plus fees. I financed and paid it off 3 months later saving about $6K.
@@markh.6687 then you are stuck with the hard pull on your credit for 2 years to play this game
Credit inquires don’t hurt you. Why’s that matter?
100% agree
You don’t tell them you’re paying cash until you agree on the price. That’s car buying 101
Bought a 2024 EV6 from a Kia dealership 3 weeks ago. When I asked the finance manager if there was a penalty for paying off the loan early, he told me I had to make at least 6 months of payments or there would be a penalty -- he claimed this was how I got a lower rate (and rebate). Seemed odd to me, since my wife bought a Kia a couple of years and paid it off in two months. Of course, he lied to me -- I was able to go home, set up my Kia finance account using my VIN, and paid it off in two big chunks over a few days. FM probably wasn't happy, but maybe don't lie to your customers.
Same here I bought a used Audi and the finance guy was saying I have to make at least 3 payments before paying it off. I called Audi and they told me that it was illegal to charge a penalty for early payment of a loan.
Your state's attorney general might like to know about that stealership, especially since in many states early payoff penalties are illegal.
They lie to you because if you pay it off immediately, they lose their kickbacks from the financer.
Just had this happen to me as well. Oh and 10.64% was the best interest rate we could get with an 800 credit score on a 2019 vehicle. No worries, GM financial will be paid immediately and the dealer won't get their kickback.
My old man still has that “I’m paying cash, you should give me a better deal” mentality. I tried to explain how that’s not the case anymore and he just dismisses me as young and dumb.
It’s not a bad thing for him to have that mentality.
Considering the mentality today is “just go into debt” (which is what financing something is). I get what you’re saying though, he doesn’t understand that the world is what it is and the game changes.
I get what chevydude is saying here-some people write off financing, not realizing that there are incentives and deals and you can still win out by having the cash and closing out that account so long as there’s no prepayment penalties.
Maybe send him this video and tell him it’s a guy that has well over 7000 car deals of experience. Sadly, I hear this from older people all the time and just shake my head because I know that they don’t get a better deal.
@@Fritz_Lost_Sanity for the average person, owning “nice” things means going into debt. You just have to do it responsibly. Never take on anything that you can’t afford or can’t comfortably budget for. I work with a lot of dudes that have $800-$1,000 a month truck payments and if they don’t get over time they’re hurting. The days of pulling up to a lot and saying “I’ve got $10,000 cash, whatchya got?” Are over.
I mean with some things that's true, like maybe buying a house. Some sellers would take less if they got ALL cash instead of dealing with a bank.
@@KarnageKollectibles if you have cash lying around to buy a house outright, none of this applies to you.
When I bought our RAV 4 XSE Hybrid back in 2021 it was my 4th Toyota in 15 years at the same dealership. I was already approved through my credit union but with the cooperation of the sales manager I bought their (much) higher rate and they discounted the 48 month (amortized on paper) difference between my rate and theirs and then I paid it off it 90 days. Win- win for all involved (well except the bank I guess)
I don't say it, until the end of the transaction.😂😂. Then they go scrambling.😂
I recently bought a used 2023 Toyota Tundra that had 5000 miles on it. I got if for 56,000, gave a 2500 deposit and financed through Toyota Financial. Paid it off before the first payment was due.
There was no prepayment penalty or other fee for paying off early?
@TaylorZ2 Ask before you sign if it's an open-end contract. Then read it for yourself.
I would also make sure if paying off early has an additional cost just to make sure that 1000 bucks off you would get that full benefit.
'Cash is king' is more metaphorical than figurative. One who buys a car cash is disciplined enough to wait to buy a car until he can actually afford it (meaning he can pay cash and doing so will not hugely impact him financially). One who MUST finance a purchase has already painted himself into the 'gotta have it now' mentality as he is all about instant gratification. One who buys a car cash is ready to walk away and take his business somewhere else any time if he does not like the deal or the dealer is not doing the deal on his terms.
Delayed gratification and contentment is one of the 🗝️'s to building wealth.
Okay, Dave Ramsey.
@@danieljohnson4418 following the principles of Dave Ramsey (which requires sacrifice) is a lot better than being broke. Life is a lot less stressful with no debt and money in savings and investments.
@@danieljohnson4418 🤣 But seriously, no dealership would turn down sure money. I made them a take it or leave it offer (walk-out price) and they took it during my last purchase.
I paid cash for my 2018 Silverado LT z71 crew cab 2 months ago. I talked them down. They dealer took a loss he had it 9 months. I didn't tell him i was paying cash at first. I talked them down first. Then they asked if i needed financing. I said no i need to go to the bank and get cash. But they wanted a cashiers check. I paid 15k.
Wow that cheap , must be high mileage
@@kingrexmma4387 147k miles. New transmission at 110k miles, new front hub assemblies at 111k miles, New oil pump at 140k miles. I was looking at the service records on carfax website.
@@kingrexmma4387 He left out the part that it had 200000 miles on it lol
@@dakotaautosales9673 It has 147k miles. New dealer installed transmission at 110k going by the carfax. New front wheel bearings with hubs at 111k miles, New motor mounts at 111k miles new oil pump at 140k miles. I live in the rust belt and it's clean no rust as it came from the south. Lots of maintenance on the carfax.
You got a great deal!
I always get pre-approved through my credit union, they always have better rates that what the dealer offers.
Is that a hard hit on the credit?
@@RokerSMisisipiyes
Just pay cash. I always do. Most Americans will not pay the loan off and end up paying tons in interest even when they have the cash in the bank. Pay cash don't worry about saving a 1000 dollars just pay the cash and go in with your life
I’ve have actually do this when buying vehicles.I just tell the dealer if it will make it better for them to give me a better deal I can go ahead and finance ithe vehicle and tell me how long I need to hold the loan so they can get their money.( usually 30 days)The only time I reneged on the deal is when I bought a new Harley CVO Limited and the general manager said he would knock $150 off if I would finance the bike but when I got home and looked at the paperwork in more detail, I seen that he lied and didn’t give me the150 dollars off so I waited eight days to give Harley financial time to receive my paperwork and paid it off.
Love the channel, Mike! Keep up the great work.
I pay cash and absolutely refuse to buy from a stealership.
Thanks for the reminder to not buy from a dealership
stealership
Agreed…. I pay cash and am not a participant in these games.
Plenty of good guys out there. You just gotta find them and remember them. Just like a carpet cleaner, doctor, mechanic, etc.
You could finance to get a discount but put a large down payment so you can pay it off in less than 1 or 6 months.
Not necessary. You can finance and pay it off right after the bank has funded the loan, as long as the tos on the loan has no pre payment penalty.
@@IzaguirreC that is also true. I know some folks will hold on to a loan either to build credit. Although they have cash to pay it in full. Or even they have the great credit, cash to pay it in full, but hold off in case an emergency pops off. For me I could pay off my car right now but I want to have a bit more cash reserves in case of an emergency.
i got a decent rio with financing they gave me 2300 off for going thru the recommended bank and that brought it below the blue book swatted down the markups had em take out the dealer branded mats etc out the door was 8500 on a 30k mile car 2 years old the next month I had to keep the financing for 30 days to keep the deal valid and no pre payoff penalties so 31st day gave em my card info and 3 days later title clean in hand
I have no problem keeping a loan for 6 months or so for the dealership to keep their loan kickback if they give me a good deal. Did that with our previous purchase, put 50% down and paid the loan off in the 9th month.
Can you do a video on what a smart car can do without you knowing it. Can they be tracked, can they send out your personal information, keep memory of your daily habits or even sell your information???? I know they can shut them down, so I was wondering how far it goes.
I am too old to finanace a car. I like to pay cash when I buy anything. My income will not qualify me to get a loan for $50000 for a car loan. But they don't know how much cash I have in the bank or the investments I have. They just want to know what your monthly income is to finance to see if you qualify for a loan. The credit application does not ask about cash in the bank or under the bed. So , I am a cash buyer.
I just brought a 2018 Toyota Camry Se for 20,500 I was going to pay cash for it but just financed it with 5k down and when the first payment comes I’ll pay it off
When I bought my Toyota GR86 in 2022 I financed it through Toyota at MSRP with no add-ons and no money down. Within a week I paid off the loan which really annoyed them because they didn't get their kick-back that needed 3 months of payments to be effective.
Its still a better deal cuz u dont have to pay intrest over years and years. Worst come to worst get the financing and pay it off next month. DO NOT GET ANY EXTRAS AT A DEALERSHIP
I offered to pick up extended warranties on behalf of the dealer if they'd knock price off of msrp. They agreed, and 30 days later I canceled that extended warranty, and put the return check right back into the loan they baked the warranty into. Easiest $2500 I've saved in my life.
@@blades260 unless your car breaks
Because the dealership's call the bank. Get your percentage rate that the bank's offering. Say it's 6%, then they come back to you and says the bank said 9 or10 %. They never called the bank back anything. They get over that. 6% goes right in their pocket. And the banks go a long with it. That's why cash, is not king.
Unless you pay 30% down GAP is the one advisable thing to get *somewhere*
When interest is low, which it still is, why wouldn’t you use someone else’s money to buy a depreciating asset and use your own money to invest?
I'm going to remember your three step process the next time I buy a car. Thanks for your words of wisdom 😀
Mike, good info as always!
Play it as You like.
Just don't finance.
Own outright whatever You can afford. If You don't have enough, DON'T BUY!!!!
Loans is what got us into the prices we have now. People think that they can afford whatever they want, and then when the rates go up - You just loose Your car. And can't buy another one because they are waaaay to expensive.
DON'T FINANCE !!!
Local Ford dealer has signs up on the desks "NO CASH DEALS NO OUTSIDE FINANCING" so basically their finance only!
That is hard to believe that. I guess anything is possible though.
@@Jrc1122 Last time I was in there was during peak Covid and they were getting $10k over sticker, but I have ready reviews they are still doing it.
No worries; do their in-house financing and pay the car off as soon as you have an account/loan number like Mike said. Pay it off. Done!
@@markh.6687 They make you sign a promise not to refi or pay off loan for 6 months or they will sue you for damages.
WoW!
valuable, money saving information. thank you.
Only thing people need to watch out for is how long you take paying things off. Taking out a huge loan and closing it in a month or two can actually hurt your credit report. Mostly you want to finance and pay off in at least 6 months time. Of course these are normally simple interest loans so go in and pay 95% off the first month and then pay the balance off over a few more months to avoid any concerns on the credit score. Also it often screws the dealerships over if you do this because many loans with banks require the note to exist for a minimum time before they get their full payout on the hold backs. Not often so if you do manufacture financing but common with banks. so if you pay off in 3-6 months they often don't get everything
Take my cash and do a good deal or I don't buy from you.
Simples.
He is not lying. But I only pay cash, I will walk out if I have to.
Good information.
That black Camaro SS in the background 👀
I prefer cash but I suppose that the best way to do that is not say a word about it until the end. When I had to finance I don’t think that I ever got taken. Now I might be wrong as you will probably tell me!
Works most of the time, but depends on the dealership. Just bought a brand new rare car for $40k cash, negotiated $1k off right off the bet. I guess they just wanted a quick easy sale and so did I.
but it results in a hard pull and a hit on your credit for 2 years which can cost you way more in the long run if you plan on buying anything else (house) in the next 730 days.
Depending on the loan, there may be a 2% pre payment penalty. You may save a few dollars up front by financing, but the pre payment penalty may cancel out the savings. I'll just pay cash and be done with it.
I don't know if it is a state law or federal but in my state it is illegal to charge a pre-payment penalty.
Sometimes you just don't want to haggle so you pay cash
Hey I enjoyed your video Chevy Dude. I appreciate what you do for people and getting them into good cars. Can you please recommend a dealer in my area that is like you? Maybe you know some car dealer in Springfield, Nixa, Republic, Ozark Missouri area's? Just asking cause I am buying a car soon and I am bringing a cashiers check to buy it. $15-20K? Thanks I am looking forward to more of your videos.
Always remember one of the biggest red flags: If the stealer can add a bunch of warranties and tire & wheel protection for the same payment as without them, they’re “holding” on your interest rate. This means your rate is a lot lower than the say, but won’t sell you the vehicle at it unless you buy extra bs. Just add the unnecessary bs, wait for the deal to fund (or first month’s payment), and cancel the warranties. Your payments may still be the same amount, but you’ll pay less interest due to having a lower rate and lower balance.
I paid cash for my 2024 2SS 1LE, and they had no idea how I was paying up until the day my car arrived
Around where I live the dealerships are trying to do a NO NEGOTIATION price program and I absolutely refuse to buy because of that. I just do not understand why they think that is a good idea. I don't understand why the have sales people still.
Cash is king at the end of the month if the dealer needs to pay bills. But just like with police. Don't answer questions ask them.
Out of curiosity would ordering a car through a dealership effect this process at all? It seems like it wouldn’t but obviously some of the things mentioned aren’t “cookie cutter” to the examples you use
In today's day and age, the average price for a vehicle is $50,000 dollars if someone can pay cash they are either a money miser that has no family or are filthy rich. Even if they finance a car, it is like a mortgage payment each month. One could get away with an ultra cheap compact car, but tbh, most people like creature comforts and gadgets. It is better to get a car 10 years old than a car new where you most likely will return the car long before the loan or lease is up. Sure older vehicles are higher in price, but they are coming down.
Dude, start investing..... :)
If I'm financing with a dealership that has a low interest incentive from the manufacturer, like 1.9%, but don't want to finance 100% of the loan, wouldn't I at least want to put some $ down on the deal so I can avoid a high monthly payment?
So finance but only in a way you can pay it off immediately with no penalty lol
Exactly
Thats exactly how I bought my harley
@@12yearssober that’s also how I bought my yfz450 sport quad lol let the free 3 months of no payment ride out then slapped 11,000 on the table lol 😂
@JacksonOffroad25
Yep I never even mentioned paying cash. I let them think they were going to make a ton on the financing. I haggle them down to the price I wanted even had them throw in some extras. 3 months later I paid the balance in full. I saved thousands.
u drop the ball on 1 thing credit score. if not paying $$$$$$$$
Who cares about the credit score if you’re paying cash? If you’re living on credit and worried about your score after they run credit, you shouldn’t be buying the car to begin with!
Years ago I took a loan out knowing I was going to pay it off quicker. When I contacted bank to get pay off amount I was annoyed because it was more than what I owed. They wanted extra on top because they were going loose me paying all that interest. So if a dealership was going to give me $1000 off for taking there loan it probably still not a good deal.
It's a shell game with dealers. The same money just moves from the vehicle price to the financing cost.
Will you have less hassel if you buy from a used car lot over a dealer that sell both new and used?
You must sell 3 cars a day if you only earn 2% net at 20k avg price will earn you about 400k a year
You need to drop the price of that gmc sierra you got sitting on the lot 😂 I been looking at it but you want 2 much for it
Looking at buying a 2014 buick verano with 105k dealer said if i have cash he would sell it for 8995 OTD which is the listed price. Your thoughts??
I wonder if you pay off the loan immediately are you still on the hook for the interest? I paid off my last car early, but I still paid the interest.
Simple, don’t tell them you’re paying cash until you have a clean deal.
Why do you have a video on paying cash as good and another not to pay cash?
Are dealerships required to report the transaction to the IRS if its more than $10,000?
I agree with saying you are financing, but they will pull your credit (hard? or soft?) and that's a ding on your credit report? Right? I am 100% paying cash from start to the beginning.
Pulling you credit doesn’t hurt your score. In 2005 FICO changed that.
Ok, so I'm needing to replace my family SUV (transmission just went out). I have 8k cash. Would it be better to purchase a newer lower mileage used SUV for 19-22k , trade in my current one, and finance the difference? Or purchase an older higher mileage SUV I can pay for outright? I feel like either way I'm just buying time. Older=2-3 years of use, newer 5-7? Suggestions?
Rest of the car ok? Can you replace the transmission and get another 5 years out of it?
Dealers want you to finance because they get a % of what you finance even its its through a 3rd party lender. Will you please show us your loan contract where it says you are under contract for 4.9%
What’s your advice on getting out or getting into a new car loan if your upside down 10-15k on the current loan ?
Just say I haven't decided!
wait when u finave thay cover lost keys ??
Always pay cash when possible, but don’t tell the dealer until the deal is done.
2:26 you didn't dwell on that point long enough...
You can pay cash, you just can't tell them until after you agree on a price.
A whole lot of words to say just pay cash.
The moral of the story by a used car from this guy
Agree bru!👌🤙
Since new cars are no longer reliable and dealers like to hide problems rather than properly repair used cars, don't do business with a dealer under any circumstances.
I go to my credit union they don't like that either
Never, ever buy from a stealership. Don't play the game.
Just tell the dealership the out the door price that you're going to pay, don't get enamored with any one vehicle or dealership, You need my business, I don't need yours!!
Good luck paying off that car loan early. They will find lots of fees, penalties and excuses to pay off the loan early.
In the YEAR TWO THOUSAND!!!!!!
Any Conan O'Brien fans? Just me? Okay.
Cash is not King. it is a pleasant.
What??
You’re WRONG . The cash price and the finance price is the same. It’s a FEDERAL LAW.
Yes, But the dealer would still try to say it isn't. Especially if it isn't in writing that you take with you and you don't have any proof. They know most ppl will never report to the bureau
This is the correct answer. Once a finance price is agreed upon, you can say I'll take it, but I'm paying cash. They cannot change the price at that point, without violating federal price discrimination laws. Hopefully anyone who experiences this, turns in that dealership.
I hear that a lot about borrowing and paying off later. If you have to borrow, you can’t afford it. If you feel you would “ get a better deal” by financing, you didn’t do your homework and need to go back to the drawing board and go elsewhere. Also new car purchases are not financial smart for many as it is a depreciating asset from the start.
the girl that sold me my car made 200 bucks? seems sorta low to me. more like 2000? no? idk...
why the walk out of the door drama every time you start a video
its not whats true in america anymore, its what you can condition gullable people to believe, most americans including politicians are willing to take there chances on ending up in eternal damnation when they pass.
Don't Pay Cash at Car Dealerships? Of course I'm paying cash. Why would I require a loan if I can just write a check, duh. Take it or leave it. My 12 year old car works just fine. Besides, It will still smoke most of these new turbo turds anyways. 😂
Absolutely lying on the profit %
The average dealership makes between 5-7% net profits per car, not 1%
Yeee Yeee
ACH?what is that.I hate that people are too lazy to say a word and have to use acronyms all the time.
ACH = automated clearing house, a common term for electronic check transfer. Would it have helped if he had said that instead? I doubt it... And no, I'm not in banking just paid attention over my life.
horsepucky! i bought my 2016 gmc with cash brand new, made my best deal, didnt mention cash until they asked how i wanted to finance it...
sticker was $42G, i paid $33G...CASH. so when u say this hasnt happened since before the year 2000, i say horsepucky
You are referring to 1 deal. I have over 20,000 interactions just my self. I think my stats will be more reliable.
They may have needed to make a deal, but you understand finance is a revenue stream and if you and someone else were working that deal at the same time and the other person went with financing, they would have gotten the truck, right? You got zero dollars off because you were paying cash.