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0% loan on the sticker price. The goal of coming in with cash is to get as far as possible below the sticker price.

dntrkv 5y ago
Dealers don't care whether you pay cash or finance. Just call around dealers within a certain mile radius you are willing to drive and find the best deal. This has been, and will always be, the best way to get a deal.
giaour 5y ago
Don’t dealerships make a good percentage of their profits from finance charges? The last time I bought a car, it took an hour of cajoling to get the cash price of a three year lease
- giobox 5y ago
  Absolutely. To take Ford as an example, It’s not that huge an exaggeration to suggest Ford manufactured cars with virtually no profit margin to help sell profitable loans via its Ford Credit arm at various times in its recent history, rather than providing loans to help sell the cars at profit. Ford Credit is a huge part of Ford’ overall business.
chrisseaton 5y ago
This is a really common misconception that buyers have. Just stop and think for a second - put yourself in the dealer's shoes - why do you think the dealer would want cash? No reason. They don't want your cash. A cash buyer is a pain. They want to sell you a loan. The last time I bought a car I offered cash, and they countered with a four-figure discount (on total cost of ownership) if I took part of it as a loan. I now have that part of the price invested, creating money, while I gradually pay the loan. And my credit score went up as I had a new, responsible loan! Cash buyers are fools, unless you're really at the point of valuing not having a loan for moral reasons (maybe a German?) at four-figures.
- SilasX 5y ago
  Yes, and the smart move there is to take the offer and pay it early, which is still stupid on the dealer's part.
  - throwawayboise 5y ago
    Assuming you can. Some deals are set up so that you have to pay most of the interest even if you pay the loan off early, or other prepayment penalties.
    - SilasX 5y ago
      Yes, prepayment penalties are a thing. But every time this comes up, we see reports of too-good-to-be -true deals that don't have them. See, for example, this thread: https://news.ycombinator.com/item?id=14484615 https://news.ycombinator.com/item?id=14484615 I also had a friend do exactly what I described, and there was another thread where they only had to make two payments and then could pay off the rest without penalty (and even that was an unspoken gentlemen's agreement with the dealer) -- will find if I get a chance. The point is, it's simply not warranted to assume as a bedrock of truth that no dealer every makes a confused deal in this respect, as chrisseaton was insisting.
- throwawayboise 5y ago
  And if you had walked out the door they would have run after you to take the cash deal AND given you the discount. You think they prefer to deal with the time and uncertainty of putting you through a loan application, when they could pocket the same sale in cash? Nobody is coming out with less money on a loan purchase vs. cash, except the buyer.
  - chrisseaton 5y ago
    I think you're mistaken about how dealerships and car sales are structured, at least in places like the UK and the US. Maybe it's different where you are? They get a proportion of the sale price, and they get paid a referral fee for you opening a loan, and then on top of that they can offer extras that you probably don't need like fabric protection products. > Nobody is coming out with less money on a loan purchase vs. cash, except the buyer. The dealer is paid to get you to get a loan. If they don't get the loan, they get less money. My understanding is that their referral fee is somewhat weak about how much the loan actually has to be, so they just care that you take it. It's worth it to them to discount the price by less than their loan referral fee, in order to get the loan referral fee. > And if you had walked out the door they would have run after you to take the cash deal AND given you the discount. No they'd just have sold to someone willing to pay their price. There's a car supply shortage... that's the whole point of the article... did you miss that? If you want to buy a new car at the moment and you go in haggling them on a mid to high end spec car they'll just tell you to fuck off and you won't get the car you want.
nradov 5y ago
It's actually the opposite. Most franchise dealers get incentives for financing through the manufacturer's captive lender, so you can often negotiate a slightly better deal by taking a loan.
ineedasername 5y ago
One offer I was looking at recently was 0% OR $4k cash back off the MSRP. The interest rate on taking the cash back offer ended up working out to near exactly $4k. Though if you have good credit and went through a credit union you could probably get a much better rate.

Dealers don't care whether you pay cash or finance. Just call around dealers within a certain mile radius you are willing to drive and find the best deal. This has been, and will always be, the best way to get a deal.

giaour 5y ago

Don’t dealerships make a good percentage of their profits from finance charges? The last time I bought a car, it took an hour of cajoling to get the cash price of a three year lease

giobox 5y ago
Absolutely. To take Ford as an example, It’s not that huge an exaggeration to suggest Ford manufactured cars with virtually no profit margin to help sell profitable loans via its Ford Credit arm at various times in its recent history, rather than providing loans to help sell the cars at profit. Ford Credit is a huge part of Ford’ overall business.

chrisseaton 5y ago

This is a really common misconception that buyers have. Just stop and think for a second - put yourself in the dealer's shoes - why do you think the dealer would want cash? No reason. They don't want your cash. A cash buyer is a pain. They want to sell you a loan. The last time I bought a car I offered cash, and they countered with a four-figure discount (on total cost of ownership) if I took part of it as a loan. I now have that part of the price invested, creating money, while I gradually pay the loan. And my credit score went up as I had a new, responsible loan! Cash buyers are fools, unless you're really at the point of valuing not having a loan for moral reasons (maybe a German?) at four-figures.

SilasX 5y ago
Yes, and the smart move there is to take the offer and pay it early, which is still stupid on the dealer's part.
- throwawayboise 5y ago
  Assuming you can. Some deals are set up so that you have to pay most of the interest even if you pay the loan off early, or other prepayment penalties.
  - SilasX 5y ago
    Yes, prepayment penalties are a thing. But every time this comes up, we see reports of too-good-to-be -true deals that don't have them. See, for example, this thread: https://news.ycombinator.com/item?id=14484615 https://news.ycombinator.com/item?id=14484615 I also had a friend do exactly what I described, and there was another thread where they only had to make two payments and then could pay off the rest without penalty (and even that was an unspoken gentlemen's agreement with the dealer) -- will find if I get a chance. The point is, it's simply not warranted to assume as a bedrock of truth that no dealer every makes a confused deal in this respect, as chrisseaton was insisting.
throwawayboise 5y ago
And if you had walked out the door they would have run after you to take the cash deal AND given you the discount. You think they prefer to deal with the time and uncertainty of putting you through a loan application, when they could pocket the same sale in cash? Nobody is coming out with less money on a loan purchase vs. cash, except the buyer.
- chrisseaton 5y ago
  I think you're mistaken about how dealerships and car sales are structured, at least in places like the UK and the US. Maybe it's different where you are? They get a proportion of the sale price, and they get paid a referral fee for you opening a loan, and then on top of that they can offer extras that you probably don't need like fabric protection products. > Nobody is coming out with less money on a loan purchase vs. cash, except the buyer. The dealer is paid to get you to get a loan. If they don't get the loan, they get less money. My understanding is that their referral fee is somewhat weak about how much the loan actually has to be, so they just care that you take it. It's worth it to them to discount the price by less than their loan referral fee, in order to get the loan referral fee. > And if you had walked out the door they would have run after you to take the cash deal AND given you the discount. No they'd just have sold to someone willing to pay their price. There's a car supply shortage... that's the whole point of the article... did you miss that? If you want to buy a new car at the moment and you go in haggling them on a mid to high end spec car they'll just tell you to fuck off and you won't get the car you want.

nradov 5y ago

It's actually the opposite. Most franchise dealers get incentives for financing through the manufacturer's captive lender, so you can often negotiate a slightly better deal by taking a loan.

ineedasername 5y ago

One offer I was looking at recently was 0% OR $4k cash back off the MSRP. The interest rate on taking the cash back offer ended up working out to near exactly $4k. Though if you have good credit and went through a credit union you could probably get a much better rate.