Unlike private party sales where offering “cash” could be a motivator for a seller to drop the price for a quick sale, having cash at a dealer doesn’t give you any bargaining power. Dealers want you to take their financing as they make money from the bank to get you that loan. Furthermore, being a cash buyer means that it’s harder for the dealer to upsell you things like extended warranties and service plans.
Most buyers will likely need a loan to pay for a car, but I always encourage folks to shop their loans around ahead of time using their local banks, credit unions, or even online lenders. Having that pre-approval gives you leverage against the dealer’s financing and encourages them to match our beat your rate. If you are bringing outside financing to the table most dealers will consider you a “cash buyer” meaning you are not taking any dealer financing.
Make sure that the price you have negotiated with the dealer isn’t contingent upon financing with them. Some stores will offer a good price, but with the caveat that you finance with them, and usually, this means a really high interest rate. Of course, you can take the deal and then immediately pay the loan off with cash or have your own lender refinance the loan at a lower rate.
Tom McParland is a contributing writer for Jalopnik and runs AutomatchConsulting.com. He takes the hassle out of buying or leasing a car. Got a car buying question? Send it to Tom@AutomatchConsulting.com