Do cash buyers have any leverage?

kazzamunga

Hey, I posted a little while ago about my car getting hit into overnight while parked. It's since been confirmed that it's a write-off, and thankfully the insurance have offered a decent payout – so I've been looking at used cars within my budget to try and sort as quickly as possible.

I'm getting conflicted views on negotiating though. Some people are saying to me that I'm a cash buyer so I should be in a strong position to negotiate with a dealer, but I've also read that dealers don't really want cash buyers because they get more money from finance deals or even from selling on part exchange cars.

Any thoughts? I will be doing research on Parkers etc. to make sure prices are reasonable, but it seems to me that a lot of the time these days the dealers do price matches themselves because everything's online.

MikeJXE

If the cash is in your hand when you go to buy you have more chance of achieving a deal.  I would have thought so anyway although a dealer may make more with HP on the car. As far as credit payment is concerned a dealer must have to pay a percentage to the bank. Cash is still king. 

DanDare999

MikeJXE said:

If the cash is in your hand when you go to buy you have more chance of achieving a deal.  I would have thought so anyway although a dealer may make more with HP on the car. As far as credit payment is concerned a dealer must have to pay a percentage to the bank. Cash is still king. 

 Not if you're buying from a dealer, they'll make a bigger percentage on finance and extras than they will on the car. 

kazzamunga

DanDare999 said:

MikeJXE said:

If the cash is in your hand when you go to buy you have more chance of achieving a deal.  I would have thought so anyway although a dealer may make more with HP on the car. As far as credit payment is concerned a dealer must have to pay a percentage to the bank. Cash is still king. 

 Not if you're buying from a dealer, they'll make a bigger percentage on finance and extras than they will on the car. 

It's still easy money that they wouldn't turn away if they can make 10k in one go though, isn't it? Rather than part exchange and a grand's deposit and then 4 years worth of finance?

tacpot12

I think you are in a strong position to negotiate, given the state of the economy. Buyers are going to be more careful about signing up for finance while their mortgages and energy bills are high, and if they are not certain about the effect of recession on their jobs.

To get the best price, you will need to find at least two cars that you would be prepared to buy, and play the two dealers off against each other (at least in your own mind). 

Rover_Driver

The dealer doesn't have 4 years of finance, it will be the finance company. Dealers can sometimes get an 'incentive' from finance companies, which is why some try to sell with finance at a better deal than a cash offer.

Herzlos

It's worth a try, though most places won't actually take cash due to money laundering laws and the hassle. 

Of course, it gives you the best of both options; you can take the finance if it's cheaper and then clear it the next day.

diystarter7

It all depends on the car you are looking for and if it is brand new, in the past though you could get a better deal via finance at zero percent for x amount of time  as as i recall once taking it up and we were given a bigger discount and we were free to pay the outstanding amount after a few weeks I think or before interest kicked in - so we took it and paid off the rest in a month or so time - this was years ago

Richard53

I doubt if any dealer (or even private seller) would be happy with actual cash over two grand or so. Too many cash handling/security issues, never mind the money laundering regs. These days, if I say I am a cash buyer, I mean I can pay you today, card payment or I’ll BACS it to you, and it will be in your account within a few minutes. Cash meaning money transferred today, as opposed to finance, I suppose. 

Grey_Critic

According to an article in todays Sunday Times the used car market is cooling.

[Deleted User]

kazzamunga said:

DanDare999 said:

MikeJXE said:

If the cash is in your hand when you go to buy you have more chance of achieving a deal.  I would have thought so anyway although a dealer may make more with HP on the car. As far as credit payment is concerned a dealer must have to pay a percentage to the bank. Cash is still king. 

 Not if you're buying from a dealer, they'll make a bigger percentage on finance and extras than they will on the car. 

It's still easy money that they wouldn't turn away if they can make 10k in one go though, isn't it? Rather than part exchange and a grand's deposit and then 4 years worth of finance?

There is a shortage of cars, they need to maximize profit.

One option is to take out finance to get a better deal, and then pay it off after a month or two. Be aware that it will affect your credit status if you are planning on borrowing money soon, at least for the short term.