Some buyers believe that they can negotiate so low when paying in cash to buy used cars, but this is not so. It is important to understand why dealers prefer financing over cash payments before negotiating a lower price for a used car. You should also look for a better deal, regardless of how you pay, because the form of payment usually does not make a difference in a sale.
Financing option is more profitable for dealers because when they handle the financing, they receive the payment through electronic transfer within days, which is as good as cash. In addition, a dealer makes a profit for making use of a particular bank, either by marking up interest rate of buyers or by deciding to use the bank for a finance application over others. Credit unions that do not typically allow rate increases for dealer profit, offer flat fees to dealerships. As a result of this, cash purchases do not attract better prices.
Furthermore, discounts on vehicles vary by seller and car. Some dealerships buy inventory from customers who trade in and repair the vehicles thereby making the value to vary by vehicle from one dealer to another. There is no set amount of discount because dealers purchase the vehicles at different prices as the person selling to the dealer will want to make certain amount on the sale possibly to settle some debt or buy another vehicle.
Some people believe that they should pay low for a cash sale because sales managers will prefer it so that they will be able to hide the cash purchase or keep a portion of it. This is far from the truth because no manager will risk losing his job and buyers will not sign a paperwork that is undervalued in order not to have any problem if the car had problems or had to be returned.
An alternative negotiation technique is to let the dealer know that you are buying the vehicle immediately. This will give you more negotiating power as you can inform the dealer that you will leave with the vehicle if your desired price is met. You can discuss any counteroffers before making your final decision. If you are able to get access to a private seller, you may pay less if you are able to show that you are ready to pay immediately for the car because a private seller needs fast cash.
Financing option is more profitable for dealers because when they handle the financing, they receive the payment through electronic transfer within days, which is as good as cash. In addition, a dealer makes a profit for making use of a particular bank, either by marking up interest rate of buyers or by deciding to use the bank for a finance application over others. Credit unions that do not typically allow rate increases for dealer profit, offer flat fees to dealerships. As a result of this, cash purchases do not attract better prices.
Furthermore, discounts on vehicles vary by seller and car. Some dealerships buy inventory from customers who trade in and repair the vehicles thereby making the value to vary by vehicle from one dealer to another. There is no set amount of discount because dealers purchase the vehicles at different prices as the person selling to the dealer will want to make certain amount on the sale possibly to settle some debt or buy another vehicle.
Some people believe that they should pay low for a cash sale because sales managers will prefer it so that they will be able to hide the cash purchase or keep a portion of it. This is far from the truth because no manager will risk losing his job and buyers will not sign a paperwork that is undervalued in order not to have any problem if the car had problems or had to be returned.
An alternative negotiation technique is to let the dealer know that you are buying the vehicle immediately. This will give you more negotiating power as you can inform the dealer that you will leave with the vehicle if your desired price is met. You can discuss any counteroffers before making your final decision. If you are able to get access to a private seller, you may pay less if you are able to show that you are ready to pay immediately for the car because a private seller needs fast cash.
No comments:
Post a Comment