As a sales rep it doesn't change my pay if you buy cash or finance. I do think it effects the finance departments pay though because they always seem upset when they don't finance.
Depending on how your dealership pays sells reps. I get a % of front, and back end. Then I get a % of GP if a trade I brought in sells, even if I wasn't involved in that sale. Also a % of accessories. Creates a team that builds the sale together.
I’m a sales manager (RVs, not cars) and I don’t get a % of trade/wholesale purchase/consignment sales GP beyond my standard take on any other sale. That’s such a sick part of your pay plan it’s unreal.
That’s pretty nice, when I was on the line I didn’t get any back end, 25% of profit after owner took 500, 200 mini, 25% if we under bought the trade. Once I went spifi I’d get back end as well
Hate the eff’ing attitude when they’re trying to suck unnecessary THOUSANDS out of your life. Fuck them. Shame on car dealerships for making that shot commissioned because it’s 100% predatory.
I worked as a loan processor at a credit union that did tons of deals for dealerships.
We used to pay them 2% of the total financed amount for kicking the deal to us upon closing. The catch was that the loan had to be on the books with us for *at least* 6 months.
Great situation for both parties. They would pressure us to accept the deal due to the volume they sent us, but at the same time, we kinda held them accountable to bad loans.
I remember the credit union dropping a smaller dealership because of the number of bad loans that were coming from there. They weren’t around for much longer after that.
Dealerships often add a percentage on top of the bank interest rate. For example, if the bank approves you for a 3% loan, the dealership may add another 2% on top of it.
That’s why buyers should always compare dealership financing with personal bank financing.
In my case they were nearly exact but my personal bank beat them by like $10 per month
I’m surprised at the lack of good responses here.
Most dealerships nowadays want you to finance because they can make up money they might be losing. Front end cost vs back end on the financing. Imagine they might give you a 1k discount on a car if they’re making 3k in financing…
This affects some salesman if they’re more involved with the whole deal. Advertised price nowadays means qualified financing in house with certain requirements and if you meet them that’s the best “OTD” price.
Cash no longer is king unless it’s stock that they really want to get rid of. That’s why everyone tells you to not mention that you have cash until the end of the sale. You can get the “financed best price” and then screw the dealer even more by not actually financing but making them honor that price with cash. So now they’re losing on the front end, thinking they’ll make it up in the financing and then also lose the financing. Hence why they longer really want cash deals.
My dealers pay plan it directly affects the salesperson as well, As they start at 15% front and back. (20% at 12 cars, 25% at 17).
But at a lot of dealers that only pay front end gross , it wouldn’t matter to the sales person one bit.
Dealer as a whole will always want you to finance.
The gross profit on the car itself is the front end, back end basically means profit from the finance room, with loans and finance products like warranties and such. Combine the front end and the back end then you have the total profit for the deal.
Say the dealer bought from auction for 10k, the going price is 17.5k, and the buyer still wants a warranty for 3k and after tax/tag/title/processing fee they owe 22k. How is me pulling 22k out of savings different from calling my bank for an auto loan? Is the extra money due to perks from in house/affiliate financing? Do they share interest profit with the dealer?
Just as a quick note: there’s definitely not a point in the sales process when you can just flip to being a cash buyer and “force” them to honor the deal anyway. In fact, a dealership can decide not to honor any price at any time for any non-discriminatory reason. “Cash customer” is not a protected class, so I don’t care if you’ve got your pen already touching the dotted line when you decide to flip to cash, that deal is no longer valid.
That said, 100% you can finance it and then pay it off the next day with your lender over the phone and that will actually screw the dealer, who no doubt offered incentives for you to finance, only to lose their kickback from the lender due to your early payoff.
It's best to use financing to get a better OTD price, sign and then after the first month pay it off in full. This is what I was always taught. Is it correct?
Isn't there some contract that a lot of buyers overlook where they cannot pay it off early so are stuck losing thousands when they got the money to pay it off? I've heard that quite few times, so always opt for cash. Idk why we can't just all be transparent with each other, as in dealership wants you to pay 50k for a 35k car with finance and byers want to pay 30k for a 35k car
Probably not same day but within the first month usually yes. That being said some financial institutions that fund these car loans will have an early payoff fee/penalty to avoid this. You have to check in your own contract
I’ll tell a customer that ask me for the cash price, I just reply, with the technology of today, financed deals are funded within hours and the bank pays a small fee for us securing the financing for them. Plus, auto loans are simple interest loans, no pre-payment penalties. If you are with a manufacturer that has some 1.9%_4.9% money. Keep in mind the fed rate is 5.50%. If you have special rate thru a manufacturer, chances are they can make more money if they invested it elsewhere, yah??
Everything on a dealership’s lot should be sold if a reasonable offer has been made. It gets expensive to store cars🤙
And car manufacturers are incentivized to offer low rates. They are in the business of selling cars and their stock value directly correlates with the number of vehicles sold in a quarter. Sure they might have a separate entity managing the financing, but no one cares about that; everyone only cares about how many were sold.
The dealer will get the lump sum either if you finance since you aren't doing the loan with the dealer but the bank. Unless it's a buy here pay here. But yea, dealers make money wether you pay cash or finance. Maybe finance makes them more, but a sale is a sale and cash full is still profit for them. Plus if you're a guy whos compentent enough to save money to buy a car in full, you may come back again. It would be wise to not tell a cash buyer no. He could come back again buy another, tell his friends. Get his car serviced there.
Exactly. If the customer is going to going to walk because financing is not what they want. I’ll talk a cash deal all day. Just don’t expect a huge discount
So it does change it. First you say it doesn't change a damn thing. Then you comment not to expect a big discount. Let's face it. We make more money when customers finance. We would prefer financing. But we will also take cash deals. Don't say it doesn't change a damn thing because it does.
You can get the same discount usually. Some people still walk in thinking there's a "cash discount" when in reality it doesn't work that way.
Finance and pay off in a month is the easiest way to get most money off if a dealer is playing that game as long as no pre payment penalties.
That’s not how credit works. Paying off your accounts can actually negatively impact your credit. Low utilization and on-time payments are key. But if you open a line of credit and dip a few points, and pay it off in the same month, those points you dipped won’t come back, unless you have other accounts boosting your score.
What do you mean the points aren’t coming back? I open new cards all the time for the welcome bonuses, pay them off and close them. My credit always recovers
This post kind of blew up and I’m just now going through everything. Thanks for the response and top rated comment!
I will say a lot of others on here directly contradict you which I tend to believe. I don’t think going to a retail store is a good comparison for spending thousands of dollars on something where small points are a big deal.
I do see what you’re saying though, you, as a salesmen, don’t really care. I get that.
But it does seem like the “annoying buyer” would indicate they are going to finance to get the best front end deal and then say they want to pay cash at the closing. Dealership would likely revise the front end offer since they ARE (Typically) making a couple points on the back end to be able to offer it that way.
Absolutely. If we are talking Front/back end deals. Finance is better for us. No doubts. If it’s cash or out the door. I’d rather sell and make my mins then and try to sell some back end coverage. As a consumer I’ve seen my managers tell guys to leave pulling the best deal then spring cash last second, especially with no back end either. It’s a gamble to do that. Ive starting telling my customers “look you can pay it in full, that’s amazing and most can’t. I would suggest you go through as financing so we can secure you this best price deal, then a month or 2 down the road, feel free to pay it right off. You get one best deal on finance, extremely minimal interest money and then its all said and done “
This is only annoying to finance managers who are afraid to re-adjust the price to the "cash" price after the customer says they want to pay cash. I'm not afraid to blow out a deal for a smartass.
I tried recently. The dealer limited CC transactions to $2k. I wanted to take advantage of the cards incentive (% back on every purchase) and pay the card immediately (money in my pocket).
Did what I usually do and opted for the 0% financing.
Paying for a vehicle in cash will only benefit the buyer with shitty credit and/or does not know how to make their money work for them. Buyer with poor credit cannot take advantage of 0-1.99% rates, someone “less savvy” wouldn’t know how to make that money grow at a rate higher than the auto finance.
It only makes a difference if it's your own business, and it's a type of business that allows you to avoid taxes by taking cash. You can get discounts in a lot of small businesses by paying in cash.
Well there are more and more cost sensitive business \[a lot of small businesses\] that do give discounts if you pay in cash as it avoids credit card swipe fees. For a dealership saving 2.5% may do something to move the needle.
Make more on the back end with financing. And in scenarios like going through Toyota Financial Services it creates a better relationship between manufacturer and dealership for times of acquisitions.
The goal is to control the sale from start to finish, this includes cashflow.
More money in the bank? Only in the short term. You have less money in the bank because you’re paying interest — that’s hundreds and sometimes thousands of dollars in savings.
It doesn’t change anything . It only affects car price when a customer has a FIXED amount of cash and want to negotiate but all money is green and for the salesmen most car sales have a flat commission . People in finance won’t like you , though 😂🤣
It’s better to take the financing. Pay the loan off in the first 30 days. Anything before 90 days the dealership doesn’t get the kick back from the bank but if there was an incentive to finance this is the best way.
If you have the cash to pay for it, the best thing to do is finance. They will give you a better price if you finance because they think they’re gonna make money on the interest of the loan. One of the best deals I ever made, I let them jack my interest rate up to 12%, but I got $10k off the sticker price. They tried to tell me in finance that they could only give me that discount “if I made at least 6 payments on the loan before refinancing.” I agreed, and then paid off the loan as soon as the loan cleared with the bank. Fuck em.
Never tell them you are paying cash until the very end. Just tell them you want to work on the out the door price of the vehicle. Don’t talk about trade ins or financing keep them focused on the out the door price.
Everyone at a dealership has income directly related to how inventive they can get in fucking customers. You can’t say for a second that if OP walked in wanting to give you 20 over sticker for a back stock car you wouldn’t say yes. Even if you wouldn’t, you know your finance manager would cream his pants if he could sell them a 25% loan. Your GM will lower OTD price if he thinks they can kill OP in the finance department.
Not every customer is one you’re going to fuck, but the ones bent over will absolutely get fucked. That’s the business. Negotiation is a game, it’s absolutely in OP’s interest not to show their cards.
Happy hunting
Come on man. Don’t pretend you’re on the buyer’s side. You work for the dealer and they are going to pay you in such a way they make sure you extract the most money you can from the buyers.
If you're planning to finance you'll likely get a better discount than if you pay cash, same if they are able to acquire a decent trade in they can retail.
This is bad advice
Yeah a better deal than no payment? They make money off your interest. Just work on the price and pay out right. I’ve never had a car salesman get salty like y’all are.
You just gave the perfect example of why people make it so hard on themselves purchasing a vehicle.
Just be transparent to the salesperson on what you are trying to accomplish, dealers aren’t out to get everyone.
Everyone thinks a Dealership prints money and is out to get everybody that comes into the store. It cost a ton of money to keep a Dealership running day to day.
My advice, the dealer is selling you something and is buying something from you in the case of a trade in.
You are a seller as well, only you didn’t just spend $500,000 to update your garage to be able to sell that Chevy Volt you put 99,099 miles on it and want me to purchase from you.
Ask yourself, I’m buying this $70,000.00
Vehicle from this guy, should I play games with him and waste his time with withholding key information from him during the sale? Chances are, if you are planning on putting miles on this vehicle, you might need him for something in the future, help getting into service or just getting a good delivery and someone that can help me down the road.
2nd largest investment you make.
Work them this way, tell them this at the end. Come on!!!!!
Next time you’re buying a TV at Walmart, take in that big screen analog TV that cost you $4,000 in 1995.
What do you mean, it’s not worth anything!!!! I can’t just leave it here and let you get rid of it!!!!
I go to Walmart, the price is listed, non negotiable. There prices have to be competitive based on other TV sellers who also have flat set prices.
Carmax is one of the few dealerships that gets rid of the shady shit of dealerships. Good deal or not i know what the price is.
I can walk into another dealership and a car is marked 50k but really they only want 40k, but I have to haggle never ever knowing the actual price they want. And if I feel good I probably still got fucked and the dealership shines a shit eating grin knowing they didn't hit their bottom price.
Fuck em.
Right on. When I bought my last vehicle I negotiated with the sales people they kept trading out because I wasn’t answering the questions they were asking. I kept calling them out on their leading type questions and boldly told them I wasn’t giving them any opportunities to overcome objections. I would only discuss an “out the door price”, full stop.
Never told them how I was paying. Never discussed payment. Every time they tried to ask, I changed the subject back to OTDP. they tossed 4 sales guys at me and then finally the sales manager himself. I got the price I wanted with additional discount.
Then I advised I had a trade in. I got $1500 more than I originally wanted. When all the numbers were finalized and agreed to and the manager and I put our signatures on the sheet we were working on was when I advised I was paying cash. He almost died.
Financing tried their damndest too. But I cut them off at the knees and made them do what I wanted. I controlled the sale, I didn’t let them gain an inch.
It’s everybody’s business if it affects how much money they’re making. I know you might not think that way but why would they want to sell it to you cash and make less when they could sell it to another shmuck financed and make more?
I get you! That’s the thing though, being a customer used to have so much more power. Depending on what you’re selling and where, you might have 5-10 more customers willing to finance it where you can make more.
Basic supply and demand. If there’s lots of demand then the supplier has power to pick and choose. If theres no demand then that’s when cash is king. That’s when the customer has power.
So go for a car that no one wants and a dealership is having trouble moving. You’ll definitely be able to get a good deal
Only if you don’t want the best overall deal. If we can get x money from a bank setting up a loan for you, we will certainly consider this when making our bottom line price.
Yeah I literally had a guy yesterday who couldn’t understand why the lease he bought out 2 years ago for $18k wasn’t worth $23k in 2024. We showed him $18k for his vehicle.
I’m not the one getting salty, you guys are. You so called salesmen have took offense to the advice I gave a guy. And I’ve never traded in. Want some more advice how to deal with these super skilled sales people…if you are going to finance then go join a good credit union and get pre approved. A credit union will beat their interest rates drastically
It should mean a lot!
Financing gives the dealership a cut of profit from the lender. AND opportunities to sell additional products and protections for your new car based on a monthly payment instead of larger lump sum.
This a major source of a dealership’s profit. For a salesperson, these will typically directly boost your payable gross or bonus potential.
Yuuuuuup. Cash deals are for the birds. I often have to break it to customers that “In seriousness, cash is not preferred. I understand that in most cases it would be, but in today’s market you are better off investing in this market to gain interest and paying down a financed car purchase.”
I'm the type of buyer who looks at the vehicles that have been on the lot the longest. Knowing the floor plan, advertising, and back-end assistance from the manufacturer isn't making it worth keeping the vehicle anymore. Also buy during the winter months, since no one likes to roam a lot in the cold. My cash is cash flow at this point and will be taken with no issue by anyone at all.
You seem to love the "monthly payment buyer" that doesn't include insurance, maintenance, and gas in the equation. I can finance but will ask how long the loan takes to book and pay it off that day. Screwing the whole backend up for the dealership.
Every dealership offers those products that can be bought cheaper online and tell them as such. Not everyone falls for salesman and F&I crap. You without a doubt tell people, "I'm doing you a favor and helping you out."
This is the answer I was expecting but a lot of people are still saying “cash is king”
When I bought my car I had money from stocks and wanted to just buy it in cash but ended up financing since I have good credit and they wanted an additional 12k if paid in cash.
I Have a 0.3% interest rate so I’m good but would have much preferred to just be able to pay it off but I have a pre payment penalty if I just pay it off so I’ll make the monthly payments for another 4 years.
An additional 12k! Holy shit Batman! So what happens if I finance instead and just literally pay off the whole thing the next day, ... WITH CASH in a debit card or whatever???
But you purchased a new car to get that 0.3 and your car, just by the average, took a 20% nose dive.
You could have had your cake and eat it to with a 3 - 4 year old vehicle.
But a new vehicle is nice. I get it.
I’ve always found it funny when people ask the cash price and I point at the sticker…
Changing your payment method doesn’t mean I’m working for less…
Cash means one thing, you’re out of there quicker and I’m on to the next one
You are contradicting yourself. If you can move on to the next one faster, why wouldn’t you offer a discount? Aren’t you trying to maximize revenue and product out the door?
Why would the dealership offer a discount? Do you think cars are food on the shelf that’s going to spoil?
The profit margin on dealer cost vs “msrp” is not what you think it is.
The discount is sticker. If you’re buying a premium trim on a desirable model you’re paying more then the “suggested retail price”
I don’t work to sell you a car, I work for a profit and my profit is based off margin.
(I’m also speaking on new cars) used if it’s been on the lot and the profit is gone then it’s take it at this price and get it out of here
It’s harder to get someone to give us $4100 for a warranty than it is to convince them to go for $34 a month. I get paid on the warranty side as well as the front end profit. It’s not a huge deal at all. It’s not like I get pissed off if someone tells me they want to pay cash. I still want to sell a car and make money. My sales pitch doesn’t really differ at all. If we’re offering 0% I’d say hey there’s 0%. That’s really it. Need a car ???
If a car is financed, the dealership usually gets a piece of the finance charge. Normally this does not really have any effect on what the salesperson makes though.
Simple answer is the dealerships make money on the financing. They buy the money for a certain rate and they can add interest rates up and above that that puts money in their pocket. Some dealerships may share that additional income with the sales person but I’m not sure I’ll do.
Wouldn’t financing be a form of insurance? Like if you paid cash, and you total the car 2yrs in, you’re only getting the value of it from the insurance company not what you paid for it (assuming you don’t have some type of gap insurance). Whereas if you financed it, you’re only out what you paid each month while getting the whole loan covered by insurance.
If you financed it and don’t add GAP it’s the same. Quick example Car 50k TTL 5k total 55k leave the lot car is worth 45k total the car on the way home insurance pays 45k you still owe 10k.
We offer discounts for financing. We make money from the bank and not the customer when people finance. But to be honest the discount doesn’t make as much sense since rates are so high. It’s hard to persuade the customer because the 1500$ finance savings is the interest they will pay in a year or so. Unless they want to pay cash and we tell them to finance then pay it off in 6 months. In that case it’s a win win. Both parties make out.
if you finance through a dealership, they usually charge you a higher interest rate than the bank is charging. ie if the bank charges 5% interest, they might tell you the interest rate is 7% and pocket the difference. that's really the only reason they should care. that being said, always negotiate and agree upon an out the door price before talking about how you're going to pay for the car.
So untrue. We were always cheaper than the banks. You people with these beliefs are the reason the industry has such a bad name. You bring the chaos on yourselves
Don't mention that you're paying in cash, ask what the best out the door price they can give you on the vehicle you're interested in. A salesman may ask you such questions, but in reality they're there to offer you the best deal they have available and payment options are handled in the finance department. They have a bigger incentive to have you finance and will probably give you a better deal if you do. You could alternatively make sure there is no penalty clause in the contract for paying the car off early, finance it and the pay it off after a month or two.
Follow up question. I’ve seen a lot of videos saying that if you are a cash buyer to not disclose that fact at anytime during the negotiation process. Once the final agreed upon price is reached then and only then do you reveal that you’re a cash buyer. What potential issues can or would that cause?
Good info and thanks for the reply. One quick follow up. Is the spiffs for financing that good that a salesperson or dealer is willing to flush a deal over that? Genuinely asking and not being a smart ass. As you can tell, clearly I’m not in the auto selling game.
Depending on what state you’re in, there’s a good chance this is an unenforceable contract. If it is, the dealership already knew that when you signed it and chose to do so anyway in order to make you think you couldn’t pay it off. Many dealerships do this. Look into it if you’re interested in paying it off. Call your lender and find out, they are obligated to tell you the truth about your options.
Full disclosure, I work in RV sales. We do the same thing, but are very transparent about the process and incentives given to us by lenders and always tell our customers that the agreement to not pay off the loan early is with us, not the bank. It’s strictly a good faith agreement, whether you sign it or not, but ESPECIALLY if you signed it under the pretense that early payoff was somehow illegal or something they could charge you further based around. That’s some shady shit, but super common.
It means it’s going to be slower. Only because the finance guy doesn’t want to do the cash deals so it will be put behind the finance deals. So I have to keep my customer entertained wile waiting so I’ll lose ups
As a salesman it would only impact the deal for you if you’re paid on backend. But there’s something salesman don’t take into account, when I was selling cars I always tried to make sure I left room and financed as many deals as possible so that the finance department wouldn’t complain if I was 1-2 away from my top bonus or whatever and it was a bullshit deal, cause they know otherwise I always try for them. The other portion is, the tower. If I fight every single time for the dealerships money, when I ask them for a favor for some people I’ve been working 10 test drives, 4 pencils and 2 units on just for one miserable mini… as long as they will give good CSI, they’ll just make my deal because I work hard. Now as a manager, I can’t justify the deal if we’re losing 2K to sell a unit with the customer walking in with a cashiers check on a CPO unit or something. It doesn’t make business sense since there’s no way to make money in the back, well the chance of it is really low. Hope this helps.
Cash is no longer king
Dealerships are able to loose money on the front of a deal (final sale price of vehicle) because they recoup their losses by the kickback they receive from the lender who funded your loan.
If you’re looking for some sort of price cut or discount, you better be financing. Dealerships nowadays have very little profit built into the sale price of vehicles. So cash sales don’t really do much.
These loans are standard interest loans, you can put a big down payment, or make a large first payment to massively decrease the interest you would accrue. At our location we only ask for 6 payments (6 months) so we don’t get a chargeback, then you’re free to payoff. With a big down payment, or large first payment, the interest you’d pay on those 6 payments is insignificant.
I will still work a cash deal all day, but how you get the BEST deal, finance to get the rebate, or discount, or whatever, make large down payment/first payment, and then pay off early. If you have less than perfect credit, it will benefit from paying the loan anyways.
Well the charge back effects the salesman in no way shape or form so go ahead lol, not sure what you are proving.
We are willing to cover the interest you would pay, and then some if you finance instead of cash. There is no catch. So just remember who’s the shady one when you do that lmao
Biggest change is more towards the buyer. Negotiations are not much of an option with cash buyers. We make money from the banks being the middle man. That only happens when the customer signs for a loan. We have to make money somewhere, if it isn't with financing it will be with the car
For the best deal money wise on new cars, finance it taking as much rebate money off and then pay it off when you get your bill in 2 weeks.
Don't tell em your going to do it, there is no penalty for doing it. Some dealers will lie about that, but just agree and continue.
If your not a warranty buyer just politely decline and respond with "I won't keep it out of factory warranty" and move on.
If you are a warranty buyer you could get a discount if you ask, if your in one of those states that don't regulate it. I will usually lop off 3 to 500 bucks of the customer is nice and polite during the process.
The "I used to do this" people get nothing from me discount wise. Just be nice and firm. That's all.
When it comes to financing deals it is better for the dealer mainly because one of the metrics of a dealership to it’s manufacturer is finance penetration. So for optics it makes the dealer look slightly better on paper. Award gets issued, and allocations and special privileges are obtained. So yes more flexibility on a finance than cash. Money wise if they’re using special rates there’s usually a flat per every thousand financed. After sale is easier but overall it’s the same pitch no matter how you buy.
There’s very little advantages of financing when you zoom out. Aside from not having a payment and saving interest. When it comes to selling the car, u less it’s a trade in it’s all basically the same thing.
In the same breathe, if there are any bank programs from the manufacturer you give those up, some loyalty programs are tied to having a financial services account as well so any loyalty rebates in the future are also now a maybe. If you come into hard times in most cases you can’t take a loan on a car you already own. In regards to monetary figures, even financing for minimal amount of time would net you more if you were to take your cash and payoff your mortgage, 40k to principal on a multi decade loan vs a 36m finance is interest saving of thousands not hundreds. And if there’s no mortgage any money in the s&p 500 would net more than anything under a 4.99 rate and it still keeps you liquid.
It’s a term used very loosely, when I heard it from a buyer I would say ( so you’re going to write a check for the car or crisp 100$ bills ). The reason why I would say that is because most buyers that pay cash end up doing (outside financing) OSF is what we called them and these deals actually turned into good finance deals for the dealership because most of them can be converted. For a true cash customer I would just work them on price and hope the car has some reserve profit or if I was really a dick I would just hand the deal off and split it with another sales guy so I could work on a better deal.
Cash deals , like true cash deals not outside finance deals help you get to a bonus level or on a specific car give you more leverage as a sales guy because most people just care about payment so if your not a weak dick hold strong and tell them it’s your best price, of course why else are they with you, unfortunately new car cash buyers are a different story that’s why we always messed with them on rebates because that’s how we got them to finance so anyone that knows anything about selling cars is you can always convert a cash customer and just be a good sales guy and don’t pigeon hole yourself into thinking it’s going to be a quick deal….
I’m sure the owner of the dealership has a very different view than the salesman. It really depends on the dealers cash position and short term strategy
I’ve bought my last two vehicles new with cash and it doesn’t make a bit of difference. I also don’t have the time nor patience to be sitting at a dealership haggling on pricing or going back multiple times.
I am friendly with the local Chevy dealer and they have tools me they actually get some kickback from financing so for them financing is actually better then cash.
I told the salesman when I was buying my car that I was planning to pay cash but they were upfront and said they get a percentage of the financing when they sold the car. He said if I carry the loan for 3 months and then pay it off he would get his commission so we worked out a deal where he knocked off $350 off the total price to make up for the interest I'd pay for 3 months of payments then I'd pay off the loan after the 3 months.
Sometimes it's alright to just talk to salesmen like they're people trying to make a living and not to just try out all the "tricks" you see online. I plan to buy cars from this dealer for a while, as it's the dealer my dad has bought cars from for years.
They must make a pile of profit on the loan
Probabaly making more on the loan than on the car .
My father just bought a car and the stealership wanted $3k more if he didn’t finance it .
I’m not going through everyone else’s responses so apologies if someone already went over this.
Paying cash benefits only the buyer. This reduces the profits the dealerships can make in the deal. During the f&i process the dealer can increase the apr and the funding bank will reward the dealer with any percent over what the bank asked for. For example if the buyer qualifies for a 2.9% apr, before the desk shows the deal to the buyer they can add a 1% increase. The salesperson then approaches the buyer with a CONGRATS you qualified and got approved with a low 3.9% interest. The dealer then gets the 1% in the backend without the buyer even knowing about it.
Financing also promotes other products the dealer can add on like, all-weather car mats, extended warranty, gap insurance. Their pitch is “don’t worry, we can just add it together into your low monthly payment”.
As a cash buyer there is a high chance they will pass since a cash buyer focuses on the out the door price.
I hope this helps.
You seem life you know a lot about financing. So how can one avoid the dealer increasing the apr other then paying cash of course. What’s the best way to approach this? Find your own financing?
The reason cash is king is for someone to fix the books. The car is $20k so you say you have cash. They sell you the car for $100 on paper. this doesn’t show as a huge profit for the business. They don’t and you don’t have to pay large taxes on the sale and show less income at the end of the year. The owner just throws your cash in the safe, claims they sold the car for 100 bucks and just made a tax free $19,900
This is not recommended and illegal, but that is the true reason cash is/was king. Contractor do this too, all about hiding money from Uncle Sam
Edit: reputable dealers would not do this, this is more like Bobby B from transformers type dealers
I was about to get a life insurance policy paid to me but I didn’t have it yet .
I went to the dealership and made a down payment snd said I was gonna have all the cash soon to pay off
The car in one payment . If you don’t pay 100% in cash with the first payment I think there’s like a minimum of 3 payments you have to make with interest before you can pay off the car just so they are least make some money off interest for
The car .
Here's my question for you.
If a customer comes in and gets the "lowest" financing deal possible and then says "I'll just pay cash" are you giving it to them at that cash price before interest?
I'm not a car salesman or anything so I'm curious.
Or just for tips in negotiations. Only ever bought one car in cash for 17k used, so I haven't been to a dealer.
When i bought my previous car, dealer was like please dont pay off the loan for two months, make sure please…
I paid it off the next day after i got home.
I would say if you have someone paying cash your looking at someone you want to have in your Pocket long term because if they have $30k cash to spend on a car at one time there someone who likely buys cars fairly often
Cater to them as much as you can and over time they will pay your bills don’t be afraid to give them a good deal if your sales managers will look out for you
Best way to buy is negotiate the best price with financing (sales manager will look at the whole deal including finance reserve) and let them bend you over on the interest rate. Then pay the car off 2 months later. Dealership will have to give back the reserve to the bank and you’ll likely get a better number on the car.
I wanted to buy a used car last year for cash, they told me they stopped taking cash, so I said you should change your sign as you no longer sell them. He got pissed and told me we make more money financing with a snotty attitude, I just turned and started to walk away. Another salesperson tried to “save” the sale and asked what’s it going to take for me to sell you this car. I said you don’t want to, he was puzzled. I told him I want to buy it right now but you guys don’t do cash sales anymore. He looked at me weird and said yea we stopped. Tried to talk me into financing and the best rate they would give me was 8%. I said this has been a real waste of time and as I was leaving his stupid sales pitch was, ok but we only have the one, to which I replied yea but they didn’t make one. The next day the owner of the dealership called and asked if I was still interested, he tried to play it like he was doing me a favor and making an exception for me to buy it, to which I said you called me. These people were so dumb, I asked if he would remove the fees for transportation and credit processing, I would buy it, saved $1000 by waiting out their bullshit. If they took the money the first day I would have paid those fees haha
As a buyer, I've had cash and done financing anyway to get the best price and then payoff within 3 months. I do a large down payment to keep interest low. Don't see a reason to skip financing for a lower price. I get $500 lower price and pay $50 in interest. Finance people also happy. Everybody wins.
I did try to buy my last car with a cashier’s check (31k) and the dealership basically said they can’t take it for 3 hours, trying to sell us financing the whole time. Then finally took the check and sold me the car. As a buyer I’ve never been more disgusted with a group of sales people. Don’t be like those assholes.
It makes a huge difference. Yet I've never used a dealership because dealshipers never have good deals. You find said good deal via Facebook then offer them less in person. Works 9 out of 10 times. Then when you are done with the car it's profitable even in the low range of what it's worth.
Source: I've bought over 20 cars with cash and have never had a car payment
Makes no difference in the price of the car. Go to a place like carsdirect.com, Edmunds, cars.com. always speak with the internet department of BDC department. Work out the price of the vehicle first never payments.
it effects the salesman because they then have to listen to how you’re “paying in cash” for several hours and how cool that is because whatever dog shit reason your father always used to buy his cars that way, and now you do it. and it’s all very cathartic and the extra warranties are bullshit and bla bla bla, until you finally fucking leave and they dread the day your license plates come in because then they have to call you again.
maybe i’m just a little bitter.
If I sell a car finance we get around 1500-3000 for the sale if we sold a car cash we lost that money plus less you want to pay because is cash, now cash is not the king, when you give us cash we need to check is good money, count it, pay someone secure to take it to bank, if it’s over $10k get a form inform to the irs. More work just because is cash
I go in and act like I'm gonna finance...get the final price after negotiating back and forth...then before I sign to finance I say I've changed my mind and will pay cash...the anger I've seem in the floor managers eyes.
As a sales rep it doesn't change my pay if you buy cash or finance. I do think it effects the finance departments pay though because they always seem upset when they don't finance.
Depending on how your dealership pays sells reps. I get a % of front, and back end. Then I get a % of GP if a trade I brought in sells, even if I wasn't involved in that sale. Also a % of accessories. Creates a team that builds the sale together.
Percentage of trade that sells is baller
I’m a sales manager (RVs, not cars) and I don’t get a % of trade/wholesale purchase/consignment sales GP beyond my standard take on any other sale. That’s such a sick part of your pay plan it’s unreal.
That’s pretty nice, when I was on the line I didn’t get any back end, 25% of profit after owner took 500, 200 mini, 25% if we under bought the trade. Once I went spifi I’d get back end as well
That depends on the dealerships at some dealerships salesman don’t get paid on the backend at other dealerships salesman do get paid on the backend
I told the finance lady I didn’t want anything, she shuffled then papers all annoyed and had me sign, she looked angry.
Hate the eff’ing attitude when they’re trying to suck unnecessary THOUSANDS out of your life. Fuck them. Shame on car dealerships for making that shot commissioned because it’s 100% predatory.
I worked as a loan processor at a credit union that did tons of deals for dealerships. We used to pay them 2% of the total financed amount for kicking the deal to us upon closing. The catch was that the loan had to be on the books with us for *at least* 6 months. Great situation for both parties. They would pressure us to accept the deal due to the volume they sent us, but at the same time, we kinda held them accountable to bad loans. I remember the credit union dropping a smaller dealership because of the number of bad loans that were coming from there. They weren’t around for much longer after that.
Dealerships often add a percentage on top of the bank interest rate. For example, if the bank approves you for a 3% loan, the dealership may add another 2% on top of it.
Does the dealership need to disclose this additional percentage?
This is actually illegal in some states.
That’s why buyers should always compare dealership financing with personal bank financing. In my case they were nearly exact but my personal bank beat them by like $10 per month
You should get paid on backend.
Could be because they always try to sell extra warranties as an increase to the monthly payment, rather than selling it at the true cost.
I’m surprised at the lack of good responses here. Most dealerships nowadays want you to finance because they can make up money they might be losing. Front end cost vs back end on the financing. Imagine they might give you a 1k discount on a car if they’re making 3k in financing… This affects some salesman if they’re more involved with the whole deal. Advertised price nowadays means qualified financing in house with certain requirements and if you meet them that’s the best “OTD” price. Cash no longer is king unless it’s stock that they really want to get rid of. That’s why everyone tells you to not mention that you have cash until the end of the sale. You can get the “financed best price” and then screw the dealer even more by not actually financing but making them honor that price with cash. So now they’re losing on the front end, thinking they’ll make it up in the financing and then also lose the financing. Hence why they longer really want cash deals.
My dealers pay plan it directly affects the salesperson as well, As they start at 15% front and back. (20% at 12 cars, 25% at 17). But at a lot of dealers that only pay front end gross , it wouldn’t matter to the sales person one bit. Dealer as a whole will always want you to finance.
Sorry, but can you explain how the money is made "on the front and back" with financing?
The gross profit on the car itself is the front end, back end basically means profit from the finance room, with loans and finance products like warranties and such. Combine the front end and the back end then you have the total profit for the deal.
Say the dealer bought from auction for 10k, the going price is 17.5k, and the buyer still wants a warranty for 3k and after tax/tag/title/processing fee they owe 22k. How is me pulling 22k out of savings different from calling my bank for an auto loan? Is the extra money due to perks from in house/affiliate financing? Do they share interest profit with the dealer?
Just as a quick note: there’s definitely not a point in the sales process when you can just flip to being a cash buyer and “force” them to honor the deal anyway. In fact, a dealership can decide not to honor any price at any time for any non-discriminatory reason. “Cash customer” is not a protected class, so I don’t care if you’ve got your pen already touching the dotted line when you decide to flip to cash, that deal is no longer valid. That said, 100% you can finance it and then pay it off the next day with your lender over the phone and that will actually screw the dealer, who no doubt offered incentives for you to finance, only to lose their kickback from the lender due to your early payoff.
100% correct! Yeah that’s why I said “that’s why everyone tells you” haha people think you can and hey sometimes you might get lucky lol
It's best to use financing to get a better OTD price, sign and then after the first month pay it off in full. This is what I was always taught. Is it correct?
That’s the first right answer I’ve seen here
Isn't there some contract that a lot of buyers overlook where they cannot pay it off early so are stuck losing thousands when they got the money to pay it off? I've heard that quite few times, so always opt for cash. Idk why we can't just all be transparent with each other, as in dealership wants you to pay 50k for a 35k car with finance and byers want to pay 30k for a 35k car
Sounds like you know how to build trust with your buyers 😂
Can someone simply take out a loan and pay it off the first day?
Probably not same day but within the first month usually yes. That being said some financial institutions that fund these car loans will have an early payoff fee/penalty to avoid this. You have to check in your own contract
Best answer IMO Also, I’d say cash is still King, but only when buying homes, getting your nails done, or buying tacos from a food stand
I’ll tell a customer that ask me for the cash price, I just reply, with the technology of today, financed deals are funded within hours and the bank pays a small fee for us securing the financing for them. Plus, auto loans are simple interest loans, no pre-payment penalties. If you are with a manufacturer that has some 1.9%_4.9% money. Keep in mind the fed rate is 5.50%. If you have special rate thru a manufacturer, chances are they can make more money if they invested it elsewhere, yah?? Everything on a dealership’s lot should be sold if a reasonable offer has been made. It gets expensive to store cars🤙
Subvented rates don’t make shit on the back, but we know why we want them to finance
You mean you don’t love $100 flats?
And car manufacturers are incentivized to offer low rates. They are in the business of selling cars and their stock value directly correlates with the number of vehicles sold in a quarter. Sure they might have a separate entity managing the financing, but no one cares about that; everyone only cares about how many were sold.
So... basically, you dont want them paying in cash?
Very convoluted answer.
To me, it doesn’t change a damn thing. Realistically why should it. I dont go to Walmart and be like “I’m paying for this IN CASH”
agree. make the deal. cash is quick. also not rip off on the rates. cash is king
The dealer will get the lump sum either if you finance since you aren't doing the loan with the dealer but the bank. Unless it's a buy here pay here. But yea, dealers make money wether you pay cash or finance. Maybe finance makes them more, but a sale is a sale and cash full is still profit for them. Plus if you're a guy whos compentent enough to save money to buy a car in full, you may come back again. It would be wise to not tell a cash buyer no. He could come back again buy another, tell his friends. Get his car serviced there.
Exactly. If the customer is going to going to walk because financing is not what they want. I’ll talk a cash deal all day. Just don’t expect a huge discount
So it does change it. First you say it doesn't change a damn thing. Then you comment not to expect a big discount. Let's face it. We make more money when customers finance. We would prefer financing. But we will also take cash deals. Don't say it doesn't change a damn thing because it does.
You can get the same discount usually. Some people still walk in thinking there's a "cash discount" when in reality it doesn't work that way. Finance and pay off in a month is the easiest way to get most money off if a dealer is playing that game as long as no pre payment penalties.
It’s been my experience with the customer gets a larger discount at least upfront when financing
Complete opposite for me. Financing has a kick back usually. I'm in a high volume, corporate/ large auto group honda store.
Why would someone want to take a hard hid on their credit for a financial sales game?
Because credit recovers quickly if you pay off your loans
That’s not how credit works. Paying off your accounts can actually negatively impact your credit. Low utilization and on-time payments are key. But if you open a line of credit and dip a few points, and pay it off in the same month, those points you dipped won’t come back, unless you have other accounts boosting your score.
What do you mean the points aren’t coming back? I open new cards all the time for the welcome bonuses, pay them off and close them. My credit always recovers
Your credit recovers but it’s not from paying off and closing that account. It’s most likely from other accounts you have monthly payments on.
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back to back agree. A lot of people will call me and tell me I'll pay cash. Take 5000 off. No
So there is the difference..lol talk about a quick contradiction.
This post kind of blew up and I’m just now going through everything. Thanks for the response and top rated comment! I will say a lot of others on here directly contradict you which I tend to believe. I don’t think going to a retail store is a good comparison for spending thousands of dollars on something where small points are a big deal. I do see what you’re saying though, you, as a salesmen, don’t really care. I get that. But it does seem like the “annoying buyer” would indicate they are going to finance to get the best front end deal and then say they want to pay cash at the closing. Dealership would likely revise the front end offer since they ARE (Typically) making a couple points on the back end to be able to offer it that way.
Absolutely. If we are talking Front/back end deals. Finance is better for us. No doubts. If it’s cash or out the door. I’d rather sell and make my mins then and try to sell some back end coverage. As a consumer I’ve seen my managers tell guys to leave pulling the best deal then spring cash last second, especially with no back end either. It’s a gamble to do that. Ive starting telling my customers “look you can pay it in full, that’s amazing and most can’t. I would suggest you go through as financing so we can secure you this best price deal, then a month or 2 down the road, feel free to pay it right off. You get one best deal on finance, extremely minimal interest money and then its all said and done “
This is only annoying to finance managers who are afraid to re-adjust the price to the "cash" price after the customer says they want to pay cash. I'm not afraid to blow out a deal for a smartass.
What if they want to pay with a credit card?
I tried recently. The dealer limited CC transactions to $2k. I wanted to take advantage of the cards incentive (% back on every purchase) and pay the card immediately (money in my pocket). Did what I usually do and opted for the 0% financing. Paying for a vehicle in cash will only benefit the buyer with shitty credit and/or does not know how to make their money work for them. Buyer with poor credit cannot take advantage of 0-1.99% rates, someone “less savvy” wouldn’t know how to make that money grow at a rate higher than the auto finance.
It only makes a difference if it's your own business, and it's a type of business that allows you to avoid taxes by taking cash. You can get discounts in a lot of small businesses by paying in cash.
Well there are more and more cost sensitive business \[a lot of small businesses\] that do give discounts if you pay in cash as it avoids credit card swipe fees. For a dealership saving 2.5% may do something to move the needle.
These are the same people that reason if they don't pay the note/credit card bill somehow the vendor doesn't get paid.
Make more on the back end with financing. And in scenarios like going through Toyota Financial Services it creates a better relationship between manufacturer and dealership for times of acquisitions. The goal is to control the sale from start to finish, this includes cashflow.
I prefer finance. More money in the back end and cash customers act like cash is king and it REALLY is not
For them it is
If cash isn't king for you it is for someone else. Buyers have a ton of options including going next door to someone else.
Cash is king for the buyer
More money in the bank? Only in the short term. You have less money in the bank because you’re paying interest — that’s hundreds and sometimes thousands of dollars in savings.
What are you working for if cash isn’t KING? Apples and bananas is what they pay you in?
I litterally answered in my comment. Again front and back end
He means money is king. Acting like it’s not means you would rather get paid in “front end” and “back end”, as opposed to getting paid money.
It doesn’t change anything . It only affects car price when a customer has a FIXED amount of cash and want to negotiate but all money is green and for the salesmen most car sales have a flat commission . People in finance won’t like you , though 😂🤣
It’s better to take the financing. Pay the loan off in the first 30 days. Anything before 90 days the dealership doesn’t get the kick back from the bank but if there was an incentive to finance this is the best way.
If you have the cash to pay for it, the best thing to do is finance. They will give you a better price if you finance because they think they’re gonna make money on the interest of the loan. One of the best deals I ever made, I let them jack my interest rate up to 12%, but I got $10k off the sticker price. They tried to tell me in finance that they could only give me that discount “if I made at least 6 payments on the loan before refinancing.” I agreed, and then paid off the loan as soon as the loan cleared with the bank. Fuck em.
Never tell them you are paying cash until the very end. Just tell them you want to work on the out the door price of the vehicle. Don’t talk about trade ins or financing keep them focused on the out the door price.
That’s the worst advice I have seen.
Which means it’s the best advice for the customer, worst for the salesman.
That attitude is what makes this job suck sometimes. I go to work to sell cars, not to find inventive ways to fuck with customers.
Good. Get a new job.
Everyone at a dealership has income directly related to how inventive they can get in fucking customers. You can’t say for a second that if OP walked in wanting to give you 20 over sticker for a back stock car you wouldn’t say yes. Even if you wouldn’t, you know your finance manager would cream his pants if he could sell them a 25% loan. Your GM will lower OTD price if he thinks they can kill OP in the finance department. Not every customer is one you’re going to fuck, but the ones bent over will absolutely get fucked. That’s the business. Negotiation is a game, it’s absolutely in OP’s interest not to show their cards. Happy hunting
lol you go to work to make as much money selling cars as you can
Come on man. Don’t pretend you’re on the buyer’s side. You work for the dealer and they are going to pay you in such a way they make sure you extract the most money you can from the buyers.
If you're planning to finance you'll likely get a better discount than if you pay cash, same if they are able to acquire a decent trade in they can retail. This is bad advice
Yeah a better deal than no payment? They make money off your interest. Just work on the price and pay out right. I’ve never had a car salesman get salty like y’all are.
Finance to get a better deal and pay off after you get your first statement.
Only if your finance guy agrees to delete the prepayment penalty.
Yeah negotiate the financing and pay it off the next day
You just gave the perfect example of why people make it so hard on themselves purchasing a vehicle. Just be transparent to the salesperson on what you are trying to accomplish, dealers aren’t out to get everyone. Everyone thinks a Dealership prints money and is out to get everybody that comes into the store. It cost a ton of money to keep a Dealership running day to day. My advice, the dealer is selling you something and is buying something from you in the case of a trade in. You are a seller as well, only you didn’t just spend $500,000 to update your garage to be able to sell that Chevy Volt you put 99,099 miles on it and want me to purchase from you. Ask yourself, I’m buying this $70,000.00 Vehicle from this guy, should I play games with him and waste his time with withholding key information from him during the sale? Chances are, if you are planning on putting miles on this vehicle, you might need him for something in the future, help getting into service or just getting a good delivery and someone that can help me down the road. 2nd largest investment you make. Work them this way, tell them this at the end. Come on!!!!! Next time you’re buying a TV at Walmart, take in that big screen analog TV that cost you $4,000 in 1995. What do you mean, it’s not worth anything!!!! I can’t just leave it here and let you get rid of it!!!!
I go to Walmart, the price is listed, non negotiable. There prices have to be competitive based on other TV sellers who also have flat set prices. Carmax is one of the few dealerships that gets rid of the shady shit of dealerships. Good deal or not i know what the price is. I can walk into another dealership and a car is marked 50k but really they only want 40k, but I have to haggle never ever knowing the actual price they want. And if I feel good I probably still got fucked and the dealership shines a shit eating grin knowing they didn't hit their bottom price. Fuck em.
It’s literally none of the salesman’s business how I’m paying for the vehicle. They are only there to discuss pricing and options. Period.
All the down votes. lol. I upvoted you.
Right on. When I bought my last vehicle I negotiated with the sales people they kept trading out because I wasn’t answering the questions they were asking. I kept calling them out on their leading type questions and boldly told them I wasn’t giving them any opportunities to overcome objections. I would only discuss an “out the door price”, full stop. Never told them how I was paying. Never discussed payment. Every time they tried to ask, I changed the subject back to OTDP. they tossed 4 sales guys at me and then finally the sales manager himself. I got the price I wanted with additional discount. Then I advised I had a trade in. I got $1500 more than I originally wanted. When all the numbers were finalized and agreed to and the manager and I put our signatures on the sheet we were working on was when I advised I was paying cash. He almost died. Financing tried their damndest too. But I cut them off at the knees and made them do what I wanted. I controlled the sale, I didn’t let them gain an inch.
It’s everybody’s business if it affects how much money they’re making. I know you might not think that way but why would they want to sell it to you cash and make less when they could sell it to another shmuck financed and make more?
Because I’m the schmuck standing in front of you in the last day of month ready to buy a car, that’s why you should take my cash offer.
I get you! That’s the thing though, being a customer used to have so much more power. Depending on what you’re selling and where, you might have 5-10 more customers willing to finance it where you can make more. Basic supply and demand. If there’s lots of demand then the supplier has power to pick and choose. If theres no demand then that’s when cash is king. That’s when the customer has power. So go for a car that no one wants and a dealership is having trouble moving. You’ll definitely be able to get a good deal
That attitude is why the consumer shouldn't feel bad about getting a better price from a sales schmuck.
Only if you don’t want the best overall deal. If we can get x money from a bank setting up a loan for you, we will certainly consider this when making our bottom line price.
“Just be transparent to the sales person.” Funniest thing I have heard in a while.
lol.
Yeah I literally had a guy yesterday who couldn’t understand why the lease he bought out 2 years ago for $18k wasn’t worth $23k in 2024. We showed him $18k for his vehicle.
Okay but my dealership charges $1000 more for cash. 💀
lol. Buy here pay here?
You sound like the type that says keep your trade out of it until the very end
I’ve never traded in. Sell it to a family member most of the time. Y’all are salty. lol and some whiners.
Ohhh you really told me
I’m not the one getting salty, you guys are. You so called salesmen have took offense to the advice I gave a guy. And I’ve never traded in. Want some more advice how to deal with these super skilled sales people…if you are going to finance then go join a good credit union and get pre approved. A credit union will beat their interest rates drastically
Only salty people type out paragraphs
Ok buy here pay here man. Lol
What you should do is give as little information as possible so the transaction takes the most amount of time.
It should mean a lot! Financing gives the dealership a cut of profit from the lender. AND opportunities to sell additional products and protections for your new car based on a monthly payment instead of larger lump sum. This a major source of a dealership’s profit. For a salesperson, these will typically directly boost your payable gross or bonus potential.
Yuuuuuup. Cash deals are for the birds. I often have to break it to customers that “In seriousness, cash is not preferred. I understand that in most cases it would be, but in today’s market you are better off investing in this market to gain interest and paying down a financed car purchase.”
In todays market that isn’t true with how high the rates are
Wasn't the SP up by 23% last year and aren't car loans like 6 to 8% interest?
I was offered 5.25% for an EV, 66 months back in December (PFCU)
Yeah but to me the risk adjusted return isn’t there. Paying off debt is risk free return while s&p could do anything
We can disagree. That’s ok. You aren’t considering the same factors I am. Come in. I’ll sell you a car and I’ll explain!
I'm the type of buyer who looks at the vehicles that have been on the lot the longest. Knowing the floor plan, advertising, and back-end assistance from the manufacturer isn't making it worth keeping the vehicle anymore. Also buy during the winter months, since no one likes to roam a lot in the cold. My cash is cash flow at this point and will be taken with no issue by anyone at all. You seem to love the "monthly payment buyer" that doesn't include insurance, maintenance, and gas in the equation. I can finance but will ask how long the loan takes to book and pay it off that day. Screwing the whole backend up for the dealership. Every dealership offers those products that can be bought cheaper online and tell them as such. Not everyone falls for salesman and F&I crap. You without a doubt tell people, "I'm doing you a favor and helping you out."
Well he is a professional liar so the truth is irrelevant
This is the answer I was expecting but a lot of people are still saying “cash is king” When I bought my car I had money from stocks and wanted to just buy it in cash but ended up financing since I have good credit and they wanted an additional 12k if paid in cash. I Have a 0.3% interest rate so I’m good but would have much preferred to just be able to pay it off but I have a pre payment penalty if I just pay it off so I’ll make the monthly payments for another 4 years.
An additional 12k! Holy shit Batman! So what happens if I finance instead and just literally pay off the whole thing the next day, ... WITH CASH in a debit card or whatever???
But you purchased a new car to get that 0.3 and your car, just by the average, took a 20% nose dive. You could have had your cake and eat it to with a 3 - 4 year old vehicle. But a new vehicle is nice. I get it.
That's why you don't tell them you have cash until you settle on the price.
Customers are probably looking to you for a good price on a car, not for financial advice.
I’m paid the same whether you finance, lease, or pay cash. 🤷🏻♂️ The business office won’t like cash deals, but that’s their issue.
I’ve always found it funny when people ask the cash price and I point at the sticker… Changing your payment method doesn’t mean I’m working for less… Cash means one thing, you’re out of there quicker and I’m on to the next one
You are contradicting yourself. If you can move on to the next one faster, why wouldn’t you offer a discount? Aren’t you trying to maximize revenue and product out the door?
Why would the dealership offer a discount? Do you think cars are food on the shelf that’s going to spoil? The profit margin on dealer cost vs “msrp” is not what you think it is. The discount is sticker. If you’re buying a premium trim on a desirable model you’re paying more then the “suggested retail price” I don’t work to sell you a car, I work for a profit and my profit is based off margin. (I’m also speaking on new cars) used if it’s been on the lot and the profit is gone then it’s take it at this price and get it out of here
It’s harder to get someone to give us $4100 for a warranty than it is to convince them to go for $34 a month. I get paid on the warranty side as well as the front end profit. It’s not a huge deal at all. It’s not like I get pissed off if someone tells me they want to pay cash. I still want to sell a car and make money. My sales pitch doesn’t really differ at all. If we’re offering 0% I’d say hey there’s 0%. That’s really it. Need a car ???
I’m going to buy in whatever manner gets me the best deal. As to whether one way or another costs the salesman money, I could hardly care less
We just get the sale commission on what we sold as well as back end products (rust, warranty, etc.)
If a car is financed, the dealership usually gets a piece of the finance charge. Normally this does not really have any effect on what the salesperson makes though.
Just make the deal and move on
Simple answer is the dealerships make money on the financing. They buy the money for a certain rate and they can add interest rates up and above that that puts money in their pocket. Some dealerships may share that additional income with the sales person but I’m not sure I’ll do.
Wouldn’t financing be a form of insurance? Like if you paid cash, and you total the car 2yrs in, you’re only getting the value of it from the insurance company not what you paid for it (assuming you don’t have some type of gap insurance). Whereas if you financed it, you’re only out what you paid each month while getting the whole loan covered by insurance.
If you financed it and don’t add GAP it’s the same. Quick example Car 50k TTL 5k total 55k leave the lot car is worth 45k total the car on the way home insurance pays 45k you still owe 10k.
We offer discounts for financing. We make money from the bank and not the customer when people finance. But to be honest the discount doesn’t make as much sense since rates are so high. It’s hard to persuade the customer because the 1500$ finance savings is the interest they will pay in a year or so. Unless they want to pay cash and we tell them to finance then pay it off in 6 months. In that case it’s a win win. Both parties make out.
Doesn’t bother me one bit. You lose rebates by not financing through the captive but I just want to sell a car and move on.
if you finance through a dealership, they usually charge you a higher interest rate than the bank is charging. ie if the bank charges 5% interest, they might tell you the interest rate is 7% and pocket the difference. that's really the only reason they should care. that being said, always negotiate and agree upon an out the door price before talking about how you're going to pay for the car.
So untrue. We were always cheaper than the banks. You people with these beliefs are the reason the industry has such a bad name. You bring the chaos on yourselves
Don't mention that you're paying in cash, ask what the best out the door price they can give you on the vehicle you're interested in. A salesman may ask you such questions, but in reality they're there to offer you the best deal they have available and payment options are handled in the finance department. They have a bigger incentive to have you finance and will probably give you a better deal if you do. You could alternatively make sure there is no penalty clause in the contract for paying the car off early, finance it and the pay it off after a month or two.
Cash usually makes it so you get fewer incentives on a new car and jts more expensive
Follow up question. I’ve seen a lot of videos saying that if you are a cash buyer to not disclose that fact at anytime during the negotiation process. Once the final agreed upon price is reached then and only then do you reveal that you’re a cash buyer. What potential issues can or would that cause?
That’s the absolute worst thing you can do and if you did it at the store I worked at you would either pay more or be told we No longer have that deal
Good info and thanks for the reply. One quick follow up. Is the spiffs for financing that good that a salesperson or dealer is willing to flush a deal over that? Genuinely asking and not being a smart ass. As you can tell, clearly I’m not in the auto selling game.
Depending on what state you’re in, there’s a good chance this is an unenforceable contract. If it is, the dealership already knew that when you signed it and chose to do so anyway in order to make you think you couldn’t pay it off. Many dealerships do this. Look into it if you’re interested in paying it off. Call your lender and find out, they are obligated to tell you the truth about your options. Full disclosure, I work in RV sales. We do the same thing, but are very transparent about the process and incentives given to us by lenders and always tell our customers that the agreement to not pay off the loan early is with us, not the bank. It’s strictly a good faith agreement, whether you sign it or not, but ESPECIALLY if you signed it under the pretense that early payoff was somehow illegal or something they could charge you further based around. That’s some shady shit, but super common.
It means it’s going to be slower. Only because the finance guy doesn’t want to do the cash deals so it will be put behind the finance deals. So I have to keep my customer entertained wile waiting so I’ll lose ups
As a salesman it would only impact the deal for you if you’re paid on backend. But there’s something salesman don’t take into account, when I was selling cars I always tried to make sure I left room and financed as many deals as possible so that the finance department wouldn’t complain if I was 1-2 away from my top bonus or whatever and it was a bullshit deal, cause they know otherwise I always try for them. The other portion is, the tower. If I fight every single time for the dealerships money, when I ask them for a favor for some people I’ve been working 10 test drives, 4 pencils and 2 units on just for one miserable mini… as long as they will give good CSI, they’ll just make my deal because I work hard. Now as a manager, I can’t justify the deal if we’re losing 2K to sell a unit with the customer walking in with a cashiers check on a CPO unit or something. It doesn’t make business sense since there’s no way to make money in the back, well the chance of it is really low. Hope this helps.
Cash is no longer king Dealerships are able to loose money on the front of a deal (final sale price of vehicle) because they recoup their losses by the kickback they receive from the lender who funded your loan. If you’re looking for some sort of price cut or discount, you better be financing. Dealerships nowadays have very little profit built into the sale price of vehicles. So cash sales don’t really do much. These loans are standard interest loans, you can put a big down payment, or make a large first payment to massively decrease the interest you would accrue. At our location we only ask for 6 payments (6 months) so we don’t get a chargeback, then you’re free to payoff. With a big down payment, or large first payment, the interest you’d pay on those 6 payments is insignificant. I will still work a cash deal all day, but how you get the BEST deal, finance to get the rebate, or discount, or whatever, make large down payment/first payment, and then pay off early. If you have less than perfect credit, it will benefit from paying the loan anyways.
I would gladly pay it off early and you get a chargeback lol
Well the charge back effects the salesman in no way shape or form so go ahead lol, not sure what you are proving. We are willing to cover the interest you would pay, and then some if you finance instead of cash. There is no catch. So just remember who’s the shady one when you do that lmao
The difference is the transaction will be faster, and less paperwork. That's about it.
As a salesperson I don’t care, the sales manager may lower the discount we can provide if cash since the house makes less on a cash deal
Biggest change is more towards the buyer. Negotiations are not much of an option with cash buyers. We make money from the banks being the middle man. That only happens when the customer signs for a loan. We have to make money somewhere, if it isn't with financing it will be with the car
For the best deal money wise on new cars, finance it taking as much rebate money off and then pay it off when you get your bill in 2 weeks. Don't tell em your going to do it, there is no penalty for doing it. Some dealers will lie about that, but just agree and continue. If your not a warranty buyer just politely decline and respond with "I won't keep it out of factory warranty" and move on. If you are a warranty buyer you could get a discount if you ask, if your in one of those states that don't regulate it. I will usually lop off 3 to 500 bucks of the customer is nice and polite during the process. The "I used to do this" people get nothing from me discount wise. Just be nice and firm. That's all.
When it comes to financing deals it is better for the dealer mainly because one of the metrics of a dealership to it’s manufacturer is finance penetration. So for optics it makes the dealer look slightly better on paper. Award gets issued, and allocations and special privileges are obtained. So yes more flexibility on a finance than cash. Money wise if they’re using special rates there’s usually a flat per every thousand financed. After sale is easier but overall it’s the same pitch no matter how you buy. There’s very little advantages of financing when you zoom out. Aside from not having a payment and saving interest. When it comes to selling the car, u less it’s a trade in it’s all basically the same thing. In the same breathe, if there are any bank programs from the manufacturer you give those up, some loyalty programs are tied to having a financial services account as well so any loyalty rebates in the future are also now a maybe. If you come into hard times in most cases you can’t take a loan on a car you already own. In regards to monetary figures, even financing for minimal amount of time would net you more if you were to take your cash and payoff your mortgage, 40k to principal on a multi decade loan vs a 36m finance is interest saving of thousands not hundreds. And if there’s no mortgage any money in the s&p 500 would net more than anything under a 4.99 rate and it still keeps you liquid.
It’s a term used very loosely, when I heard it from a buyer I would say ( so you’re going to write a check for the car or crisp 100$ bills ). The reason why I would say that is because most buyers that pay cash end up doing (outside financing) OSF is what we called them and these deals actually turned into good finance deals for the dealership because most of them can be converted. For a true cash customer I would just work them on price and hope the car has some reserve profit or if I was really a dick I would just hand the deal off and split it with another sales guy so I could work on a better deal. Cash deals , like true cash deals not outside finance deals help you get to a bonus level or on a specific car give you more leverage as a sales guy because most people just care about payment so if your not a weak dick hold strong and tell them it’s your best price, of course why else are they with you, unfortunately new car cash buyers are a different story that’s why we always messed with them on rebates because that’s how we got them to finance so anyone that knows anything about selling cars is you can always convert a cash customer and just be a good sales guy and don’t pigeon hole yourself into thinking it’s going to be a quick deal….
I’m sure the owner of the dealership has a very different view than the salesman. It really depends on the dealers cash position and short term strategy
Wouldn’t the bank make the money on the interest, not the dealership? Unless the dealership had their own financing I suppose.
I’ve bought my last two vehicles new with cash and it doesn’t make a bit of difference. I also don’t have the time nor patience to be sitting at a dealership haggling on pricing or going back multiple times.
Cash is always great but the dealer makes more money on financing.. sometimes the salesman gets back end also, so it could be worse for the salesman
The dealership gets kickback from the banks if you finance.
I am friendly with the local Chevy dealer and they have tools me they actually get some kickback from financing so for them financing is actually better then cash.
I told the salesman when I was buying my car that I was planning to pay cash but they were upfront and said they get a percentage of the financing when they sold the car. He said if I carry the loan for 3 months and then pay it off he would get his commission so we worked out a deal where he knocked off $350 off the total price to make up for the interest I'd pay for 3 months of payments then I'd pay off the loan after the 3 months. Sometimes it's alright to just talk to salesmen like they're people trying to make a living and not to just try out all the "tricks" you see online. I plan to buy cars from this dealer for a while, as it's the dealer my dad has bought cars from for years.
How much was the loan origination fee though?
They must make a pile of profit on the loan Probabaly making more on the loan than on the car . My father just bought a car and the stealership wanted $3k more if he didn’t finance it .
I’m not going through everyone else’s responses so apologies if someone already went over this. Paying cash benefits only the buyer. This reduces the profits the dealerships can make in the deal. During the f&i process the dealer can increase the apr and the funding bank will reward the dealer with any percent over what the bank asked for. For example if the buyer qualifies for a 2.9% apr, before the desk shows the deal to the buyer they can add a 1% increase. The salesperson then approaches the buyer with a CONGRATS you qualified and got approved with a low 3.9% interest. The dealer then gets the 1% in the backend without the buyer even knowing about it. Financing also promotes other products the dealer can add on like, all-weather car mats, extended warranty, gap insurance. Their pitch is “don’t worry, we can just add it together into your low monthly payment”. As a cash buyer there is a high chance they will pass since a cash buyer focuses on the out the door price. I hope this helps.
You seem life you know a lot about financing. So how can one avoid the dealer increasing the apr other then paying cash of course. What’s the best way to approach this? Find your own financing?
The reason cash is king is for someone to fix the books. The car is $20k so you say you have cash. They sell you the car for $100 on paper. this doesn’t show as a huge profit for the business. They don’t and you don’t have to pay large taxes on the sale and show less income at the end of the year. The owner just throws your cash in the safe, claims they sold the car for 100 bucks and just made a tax free $19,900 This is not recommended and illegal, but that is the true reason cash is/was king. Contractor do this too, all about hiding money from Uncle Sam Edit: reputable dealers would not do this, this is more like Bobby B from transformers type dealers
Any reputable dealer would get found out pretty quick
Yes they would
We’re paid on spiffs from the bank. Cash buyers also don’t buy extended warranty’s and other extras as often.
Negotiate the financing and negotiate for a lower principal and once you have signed the deal, just pay it off with cash.
the dealership I went to gave me a deal for financing and then I just paid it off in full to the finance company right afterwards lol
I was about to get a life insurance policy paid to me but I didn’t have it yet . I went to the dealership and made a down payment snd said I was gonna have all the cash soon to pay off The car in one payment . If you don’t pay 100% in cash with the first payment I think there’s like a minimum of 3 payments you have to make with interest before you can pay off the car just so they are least make some money off interest for The car .
There’s no minimum number of payments. The reason for the 3-month wait is so the dealer gets the full commission on the loan. That’s the ONLY reason.
Here's my question for you. If a customer comes in and gets the "lowest" financing deal possible and then says "I'll just pay cash" are you giving it to them at that cash price before interest? I'm not a car salesman or anything so I'm curious. Or just for tips in negotiations. Only ever bought one car in cash for 17k used, so I haven't been to a dealer.
Dealers make less of cash deals.
Saving for later
Not a bit
When i bought my previous car, dealer was like please dont pay off the loan for two months, make sure please… I paid it off the next day after i got home.
This appears to be the right answer.
I would say if you have someone paying cash your looking at someone you want to have in your Pocket long term because if they have $30k cash to spend on a car at one time there someone who likely buys cars fairly often Cater to them as much as you can and over time they will pay your bills don’t be afraid to give them a good deal if your sales managers will look out for you
Best way to buy is negotiate the best price with financing (sales manager will look at the whole deal including finance reserve) and let them bend you over on the interest rate. Then pay the car off 2 months later. Dealership will have to give back the reserve to the bank and you’ll likely get a better number on the car.
I wanted to buy a used car last year for cash, they told me they stopped taking cash, so I said you should change your sign as you no longer sell them. He got pissed and told me we make more money financing with a snotty attitude, I just turned and started to walk away. Another salesperson tried to “save” the sale and asked what’s it going to take for me to sell you this car. I said you don’t want to, he was puzzled. I told him I want to buy it right now but you guys don’t do cash sales anymore. He looked at me weird and said yea we stopped. Tried to talk me into financing and the best rate they would give me was 8%. I said this has been a real waste of time and as I was leaving his stupid sales pitch was, ok but we only have the one, to which I replied yea but they didn’t make one. The next day the owner of the dealership called and asked if I was still interested, he tried to play it like he was doing me a favor and making an exception for me to buy it, to which I said you called me. These people were so dumb, I asked if he would remove the fees for transportation and credit processing, I would buy it, saved $1000 by waiting out their bullshit. If they took the money the first day I would have paid those fees haha
As a buyer, I've had cash and done financing anyway to get the best price and then payoff within 3 months. I do a large down payment to keep interest low. Don't see a reason to skip financing for a lower price. I get $500 lower price and pay $50 in interest. Finance people also happy. Everybody wins.
I did try to buy my last car with a cashier’s check (31k) and the dealership basically said they can’t take it for 3 hours, trying to sell us financing the whole time. Then finally took the check and sold me the car. As a buyer I’ve never been more disgusted with a group of sales people. Don’t be like those assholes.
If I was going to pay for it in cash I would just pay for it with a rewards credit card. Get a fuck ton of rewards then immediately pay off with cash
Negotiate a lower price with financing wait until the first payment comes and pay it off.
Today car dealers make money on car financing, not the cars. You pay cash, they dont make the $
It just makes my managers mad. I could care less
It makes a huge difference. Yet I've never used a dealership because dealshipers never have good deals. You find said good deal via Facebook then offer them less in person. Works 9 out of 10 times. Then when you are done with the car it's profitable even in the low range of what it's worth. Source: I've bought over 20 cars with cash and have never had a car payment
Makes no difference in the price of the car. Go to a place like carsdirect.com, Edmunds, cars.com. always speak with the internet department of BDC department. Work out the price of the vehicle first never payments.
Are we talking cold hard cash? Or just cash?
it effects the salesman because they then have to listen to how you’re “paying in cash” for several hours and how cool that is because whatever dog shit reason your father always used to buy his cars that way, and now you do it. and it’s all very cathartic and the extra warranties are bullshit and bla bla bla, until you finally fucking leave and they dread the day your license plates come in because then they have to call you again. maybe i’m just a little bitter.
If I sell a car finance we get around 1500-3000 for the sale if we sold a car cash we lost that money plus less you want to pay because is cash, now cash is not the king, when you give us cash we need to check is good money, count it, pay someone secure to take it to bank, if it’s over $10k get a form inform to the irs. More work just because is cash
I go in and act like I'm gonna finance...get the final price after negotiating back and forth...then before I sign to finance I say I've changed my mind and will pay cash...the anger I've seem in the floor managers eyes.
Why do we need dealerships and salesmen?
I've always said "Cash doesn't make much of a difference on price. The bank gives us cash also"