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The way I see it that with 0% financing deals aplenty there’s virtually no incentive to pay cash upfront. Might just as well stick that $30k into some high-yiel

The way I see it that with 0% financing deals aplenty there’s virtually no incentive to pay cash upfront. Might just as well stick that $30k into some high-yield savings account and set up automatic payments from there. Builds credit history, too.

nostrademons 8y ago
The last couple times I've been car shopping the 0% financing deals come with a jacked-up list price. You may get the loan at 0%, but the way that works is that they quote a higher price to begin with and then the 0% financing (assuming good credit) was their "concession" in the negotiation. We bought our cars for under dealer price, paying by cashier's check, so I assume that the actual dealer price was even lower (otherwise they wouldn't be willing to sell us the car), particularly since the lowest price they would go with financing was a couple thousand higher (credit scores in the 800s).
- sokoloff 8y ago
  When I bought my LEAF in Dec 2014, I negotiated a price including a $2000 incentive from Nissan. Turns out that incentive was from NMAC (Nissan’s financing arm) and was only avail if I took a loan with them. Ok, what’s the interest rate? 0%. Wait, you give me $2K at signing and finance the car at 0% for 60 months? Ok, sign me up! In terms of selling below their invoice price, they also get an advertising holdback that scales with cars sold, so they’re still making a small amount on the sales floor. The real money at a dealership is made in the service bays, not on the sales floor. This is what really sucks for dealers about electric cars. In 42 months, my LEAF has never seen the dealer again and I’ve only added washer fluid and changed the wiper blades once.
  - mighty_atomic_c 8y ago
    Watch the range over time, though. The cells in even the latest Nissan Leafs do not have any charge or temperature conditioning for the batteries, so they are likely to age poorly basically anywhere with more than 1 season. If you care for the batteries nicely (drive slow, don't slam accelerator, avoid winter), I'm sure they'll last a good long time, but the battery is a consumable that will need to be replaced sooner than most other major components, I think the Leaf has them under the rear seats, and may be a pain to deal with. If your Leaf has fast charging, it's advised to avoid using it too often because it will heat the batteries and may reduce charge over time. I guess the skimping of quality here seems short-sighted, but every EV has some weird, questionable choices to cut down on weight.
    - sokoloff 8y ago
      Concur all around. I think I’m down about 10% range in 3.5 years. Other family members own 3 different Smart electric drives and they’re down only 2-4% in the same timeframe. (Those cars have liquid cooled batteries, which appears to dramatically reduce long-term range loss.)
  - deleted 8y ago
    [deleted]
- jjeaff 8y ago
  This is exactly right. And i reiterate this often, TANSTAAFL. (There ain't no such thing as a free lunch). No one is loaning you money interest free. You are just paying for it in the purchase price or through other fees. I will admit there are rare cases where strange incentives may make it cheaper or the same price to buy with credit, but these are very rare, and are only applicable if you artificially limit your available selection of vehicles to brand new. Even though you could get virtually the same car with 10k miles on it for much less.
  - prostoalex 8y ago
    For used cars there's always room for negotiating, but for new cars I felt the pricing was standardized through TrueCar (and their derivatives, like Costco Auto, Amex Cars, Overstock Cars). Is that not true?
    - nostrademons 8y ago
      There's the floor on prices that they will advertise to the public and then there's the actual floor on prices, and the latter can be significantly lower than the former. Car dealerships have a number of incentives that can change their reserve price in strange ways. There's the advertising holdback and potential servicing cross-subsidies that sokoloff mentions, and then there are also monthly quotas and per-salesperson quotas. If the dealer is very close to their monthly quota and it's almost the end of the month, you can get a car below invoice price, because the manufacturer will give them a bonus for hitting the quota and so the marginal profit on the one car they sell you can be positive (including the bonus) even though the car itself sold at a loss. Similarly, if an individual salesperson is close to hitting their personal quota, they will let you have the car for the lowest price that won't get them in trouble with the dealer, because it helps them hit their numbers and gives them a bonus. It's entirely possible that similar incentives exist for financing, and that's why people get zero-percent auto loans with cash back, and they're cross-subsidized by people who end up paying thousands in interest because their credit scores weren't as good or they didn't get as good a deal. But on average, the financing cost needs to be eaten by somebody, so on average you're likely to get better deals paying cash than financing. The dealer can also book all the cash immediately when you pay cash, which makes them somewhat more amenable to offer deals and opens up some other incentives for them to sell cheap (like getting rid of old model years near the end of the fiscal year and converting it to cash so their numbers look good and they can order more new model years). (There can also be strange situations that make buying new more economical than buying used - I bought my Fit in 2009 for less than used 2007 Fits were going for, because the bottom had fallen out of the economy and oil had gone from $100/barrel to $50/barrel. The used car owners had paid ~$2000 over sticker price for a fuel-efficient car in a booming economy, while I paid ~$500 under invoice price because dealers were desperate to hit their quotas, and the dealer's beliefs about where the market is at adjusts faster than private owners' beliefs about where the market is at. Such situations are the exception rather than the rule, though.)

nostrademons 8y ago

The last couple times I've been car shopping the 0% financing deals come with a jacked-up list price. You may get the loan at 0%, but the way that works is that they quote a higher price to begin with and then the 0% financing (assuming good credit) was their "concession" in the negotiation. We bought our cars for under dealer price, paying by cashier's check, so I assume that the actual dealer price was even lower (otherwise they wouldn't be willing to sell us the car), particularly since the lowest price they would go with financing was a couple thousand higher (credit scores in the 800s).

sokoloff 8y ago
When I bought my LEAF in Dec 2014, I negotiated a price including a $2000 incentive from Nissan. Turns out that incentive was from NMAC (Nissan’s financing arm) and was only avail if I took a loan with them. Ok, what’s the interest rate? 0%. Wait, you give me $2K at signing and finance the car at 0% for 60 months? Ok, sign me up! In terms of selling below their invoice price, they also get an advertising holdback that scales with cars sold, so they’re still making a small amount on the sales floor. The real money at a dealership is made in the service bays, not on the sales floor. This is what really sucks for dealers about electric cars. In 42 months, my LEAF has never seen the dealer again and I’ve only added washer fluid and changed the wiper blades once.
- mighty_atomic_c 8y ago
  Watch the range over time, though. The cells in even the latest Nissan Leafs do not have any charge or temperature conditioning for the batteries, so they are likely to age poorly basically anywhere with more than 1 season. If you care for the batteries nicely (drive slow, don't slam accelerator, avoid winter), I'm sure they'll last a good long time, but the battery is a consumable that will need to be replaced sooner than most other major components, I think the Leaf has them under the rear seats, and may be a pain to deal with. If your Leaf has fast charging, it's advised to avoid using it too often because it will heat the batteries and may reduce charge over time. I guess the skimping of quality here seems short-sighted, but every EV has some weird, questionable choices to cut down on weight.
  - sokoloff 8y ago
    Concur all around. I think I’m down about 10% range in 3.5 years. Other family members own 3 different Smart electric drives and they’re down only 2-4% in the same timeframe. (Those cars have liquid cooled batteries, which appears to dramatically reduce long-term range loss.)
- deleted 8y ago
  [deleted]
jjeaff 8y ago
This is exactly right. And i reiterate this often, TANSTAAFL. (There ain't no such thing as a free lunch). No one is loaning you money interest free. You are just paying for it in the purchase price or through other fees. I will admit there are rare cases where strange incentives may make it cheaper or the same price to buy with credit, but these are very rare, and are only applicable if you artificially limit your available selection of vehicles to brand new. Even though you could get virtually the same car with 10k miles on it for much less.
- prostoalex 8y ago
  For used cars there's always room for negotiating, but for new cars I felt the pricing was standardized through TrueCar (and their derivatives, like Costco Auto, Amex Cars, Overstock Cars). Is that not true?
  - nostrademons 8y ago
    There's the floor on prices that they will advertise to the public and then there's the actual floor on prices, and the latter can be significantly lower than the former. Car dealerships have a number of incentives that can change their reserve price in strange ways. There's the advertising holdback and potential servicing cross-subsidies that sokoloff mentions, and then there are also monthly quotas and per-salesperson quotas. If the dealer is very close to their monthly quota and it's almost the end of the month, you can get a car below invoice price, because the manufacturer will give them a bonus for hitting the quota and so the marginal profit on the one car they sell you can be positive (including the bonus) even though the car itself sold at a loss. Similarly, if an individual salesperson is close to hitting their personal quota, they will let you have the car for the lowest price that won't get them in trouble with the dealer, because it helps them hit their numbers and gives them a bonus. It's entirely possible that similar incentives exist for financing, and that's why people get zero-percent auto loans with cash back, and they're cross-subsidized by people who end up paying thousands in interest because their credit scores weren't as good or they didn't get as good a deal. But on average, the financing cost needs to be eaten by somebody, so on average you're likely to get better deals paying cash than financing. The dealer can also book all the cash immediately when you pay cash, which makes them somewhat more amenable to offer deals and opens up some other incentives for them to sell cheap (like getting rid of old model years near the end of the fiscal year and converting it to cash so their numbers look good and they can order more new model years). (There can also be strange situations that make buying new more economical than buying used - I bought my Fit in 2009 for less than used 2007 Fits were going for, because the bottom had fallen out of the economy and oil had gone from $100/barrel to $50/barrel. The used car owners had paid ~$2000 over sticker price for a fuel-efficient car in a booming economy, while I paid ~$500 under invoice price because dealers were desperate to hit their quotas, and the dealer's beliefs about where the market is at adjusts faster than private owners' beliefs about where the market is at. Such situations are the exception rather than the rule, though.)