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Why do people pay down soooo much cash when buying a new car? Is it because the finance rates you're getting aren't so good?

Money talks. Cash discounts are all over the place ... but people charge and finance so much that they don't even know to ask.

You'd be surprised at the discounts you can get on a car if you walk into a car dealership ready to pay in cash. It puts you in the superior negotiating position ... instead of begging the nice car man to borrow some money to buy a car, you've got the car guy begging you to buy his car. You'd be shocked at how reluctant a car dealer is to let you take your $10K somewhere else (and, even if they let you walk ... there's always somewhere else to go).

In the end, financing always costs more ... even 0% financing has you asking their permission to buy their car. That alone gives you less negotiating power on the price.

With the possible eventual exception of a mortgage, I won't borrow another dime. I'm done with car payments. The opportunity cost is just too much -- just think what you could do with an extra $400 - $600/mo. for the rest of your life. If you invest it, you could literally retire with millions ... hope you REALLY like the car.

SnakeDoc
 
interest blows. right now my only debt is mortgage. mortgages suck but everybody's got to do it. unless you're donald trump i guess.

Mortgages suck but it beats the hell out of paying rent and having nothing to show for it but increasing rent bills. :lecture
 
People must drive the ____ out of their cars. My family have always had our cars for more then 10 years with little problems, all American. We've always had large downpayments and get new cars with zero or little interest. Mom got her's with 0% through Ford and I got mine for .9%. We've never went over 3 years on payments. I've never understood all this bad talk about American cars.

I bought a mitsubishi eclipse GT in 2006, brand new & I don't even have 25K miles on it yet.

I've been payin over every month, I have about 15 payments left on a 7 year loan. my interest rate is 2.9%
 
I bought a mitsubishi eclipse GT in 2006, brand new & I don't even have 25K miles on it yet.

I've been payin over every month, I have about 15 payments left on a 7 year loan. my interest rate is 2.9%

That's what people need to do! So many take out loans then pay just the minimum. If you pay more any time you can, you'd get the loan out of the way quicker. I see this with people and houses. They come onto a ton of money, instead of paying at least some of it toward their houses or other big loans, they blow it on other things.

It's great to only have utilities to pay. My credit cards are only for convenience. I pay them off every month and rack up points. :yess:
 
Money talks. Cash discounts are all over the place ... but people charge and finance so much that they don't even know to ask.

You'd be surprised at the discounts you can get on a car if you walk into a car dealership ready to pay in cash. It puts you in the superior negotiating position ... instead of begging the nice car man to borrow some money to buy a car, you've got the car guy begging you to buy his car. You'd be shocked at how reluctant a car dealer is to let you take your $10K somewhere else (and, even if they let you walk ... there's always somewhere else to go).

In the end, financing always costs more ... even 0% financing has you asking their permission to buy their car. That alone gives you less negotiating power on the price.

With the possible eventual exception of a mortgage, I won't borrow another dime. I'm done with car payments. The opportunity cost is just too much -- just think what you could do with an extra $400 - $600/mo. for the rest of your life. If you invest it, you could literally retire with millions ... hope you REALLY like the car.

SnakeDoc

Actually, if you do a FV calculation, you'll be better off dropping $400/mo over 60mos at 0% vs dropping $25k today if you invest in anything > 0% rate of return. Also, if you're good enough at daytrading, you can earn a car payment in a couple of days.

That's why I don't get people throwing cash down the drain. If it's a high APR, I can understand, but even most mutual funds get you a 8% annualized return.

I do agree, though, that you could lose a little bit of negotiating power. Still, not enough imo to through down a big chunk of cash.
 
That's what people need to do! So many take out loans then pay just the minimum. If you pay more any time you can, you'd get the loan out of the way quicker. I see this with people and houses. They come onto a ton of money, instead of paying at least some of it toward their houses or other big loans, they blow it on other things.

It's great to only have utilities to pay. My credit cards are only for convenience. I pay them off every month and rack up points. :yess:

I'm just tryin to get away from this loan company ASAP...they suck balls. I'd like to choke whoever at mitsubishi for optioning off their loan division to these tards
 
Actually, if you do a FV calculation, you'll be better off dropping $400/mo over 60mos at 0% vs dropping $25k today if you invest in anything > 0% rate of return. Also, if you're good enough at daytrading, you can earn a car payment in a couple of days.

That's why I don't get people throwing cash down the drain. If it's a high APR, I can understand, but even most mutual funds get you a 8% annualized return.

I do agree, though, that you could lose a little bit of negotiating power. Still, not enough imo to through down a big chunk of cash.

Indeed. The math does work as you say it does -- though your math does fail to account for the risk involved in debt (debt is always risky). They can't repossess it if you own it. (People have also been known to lose their shirts day trading. I would NEVER take a $25K loan to day trade. Investing is very smart long term ... but extreme short term investing is pretty much gambling).

That being said -- when someone's finances are a mess, it is rarely a math problem and almost always a behavioral problem. If it were a math problem ... there wouldn't be nearly as many broke people with degrees in business, economics or finance.

The vast majority of people don't finance a $25K car at 0% so they can invest the $25K ... they finance a $25K car because they're dead broke and can't afford a $25K car (but they REALLY want it). And, people who CAN afford a $25K car typically don't finance so they can invest ... they finance so they can buy a $60K car that they can't afford (they also REALLY want it). Its an upward spiral where everyone, no matter how much money they make, is in debt up to their eyeballs because they're driving a car more suitable for people on higher economic rungs.

SnakeDoc
 
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You'd be surprised at the discounts you can get on a car if you walk into a car dealership ready to pay in cash. It puts you in the superior negotiating position ... instead of begging the nice car man to borrow some money to buy a car, you've got the car guy begging you to buy his car. You'd be shocked at how reluctant a car dealer is to let you take your $10K somewhere else (and, even if they let you walk ... there's always somewhere else to go).

This has nothing to do with this thread or the current discussion but I just wanted to throw it out there and respond.

I agree with what you're saying, having a nice down payment in cash will always help with negotiations. But it won't automatically put you in a "superior negotiating position" because it all depends on the dealership and their situation. That's what dictates how negotiations will go.

If they're doing good and selling a crap load of cars it won't matter how much cash you have you'll always be at a disadvantage when it comes to negotiations. Because they don't need your business. But you need a car.

But if the dealership isn't selling much, then they'll need your money just as much if not more than you and your need for a car.

I know because I've negotiated for 2 cars in the past and both times I never put down much money and STILL got exactly what I wanted because I dealt with dealerships that needed to sell a car. They weren't doing much business so they were willing to bend and make concessions in order to make a sale.

And keep in mind, this was after visiting numerous dealerships who told me I would NEVER get the deals I got, anywhere, ever. Which made the deals I got even sweeter since they were considered "impossible" by so many other dealerships.

It just takes patience and a certain level of stubbornness to eventually get what you want. More so than a big down payment IMO.
 
Indeed. The math does work as you say it does -- though your math does fail to account for the risk involved in debt (debt is always risky). They can't repossess it if you own it. (People have also been known to lose their shirts day trading. I would NEVER take a $25K loan to day trade. Investing is very smart long term ... but extreme short term investing is pretty much gambling).

That being said -- when someone's finances are a mess, it is rarely a math problem and almost always a behavioral problem. If it were a math problem ... there wouldn't be nearly as many broke people with degrees in business, economics or finance.

The vast majority of people don't finance a $25K car at 0% so they can invest the $25K ... they finance a $25K car because they're dead broke and can't afford a $25K car (but they REALLY want it). And, people who CAN afford a $25K car typically don't finance so they can invest ... they finance so they can buy a $60K car that they can't afford (they also REALLY want it). Its an upward spiral where everyone, no matter how much money they make, is in debt up to their eyeballs because they're driving a car more suitable for people on higher economic rungs.

SnakeDoc

Risk is inherent in everything we do.

Also, I do day trade, have a finance degree, and do very well for myself. The people losing their shirts are the ones who either take on too much risk or treat it like gambling/lotto.

Definitely agree with you, though, that there is a huge behavorial problem. I just wish more people would take heed and invest $$ rather than buying beyond their means.

To the OP - invest that money!!! :)
 
This has nothing to do with this thread or the current discussion but I just wanted to throw it out there and respond.

I agree with what you're saying, having a nice down payment in cash will always help with negotiations. But it won't automatically put you in a "superior negotiating position" because it all depends on the dealership and their situation. That's what dictates how negotiations will go.

If they're doing good and selling a crap load of cars it won't matter how much cash you have you'll always be at a disadvantage when it comes to negotiations. Because they don't need your business. But you need a car.

But if the dealership isn't selling much, then they'll need your money just as much if not more than you and your need for a car.

I know because I've negotiated for 2 cars in the past and both times I never put down much money and STILL got exactly what I wanted because I dealt with dealerships that needed to sell a car. They weren't doing much business so they were willing to bend and make concessions in order to make a sale.

And keep in mind, this was after visiting numerous dealerships who told me I would NEVER get the deals I got, anywhere, ever. Which made the deals I got even sweeter since they were considered "impossible" by so many other dealerships.


It just takes patience and a certain level of stubbornness to eventually get what you want. More so than a big down payment IMO.

Ironically there are a bunch that operate this way in the FS threads... :gah:
 
This has nothing to do with this thread or the current discussion but I just wanted to throw it out there and respond.

I agree with what you're saying, having a nice down payment in cash will always help with negotiations. But it won't automatically put you in a "superior negotiating position" because it all depends on the dealership and their situation. That's what dictates how negotiations will go.

If they're doing good and selling a crap load of cars it won't matter how much cash you have you'll always be at a disadvantage when it comes to negotiations. Because they don't need your business. But you need a car.

But if the dealership isn't selling much, then they'll need your money just as much if not more than you and your need for a car.

I know because I've negotiated for 2 cars in the past and both times I never put down much money and STILL got exactly what I wanted because I dealt with dealerships that needed to sell a car. They weren't doing much business so they were willing to bend and make concessions in order to make a sale.

And keep in mind, this was after visiting numerous dealerships who told me I would NEVER get the deals I got, anywhere, ever. Which made the deals I got even sweeter since they were considered "impossible" by so many other dealerships.

It just takes patience and a certain level of stubbornness to eventually get what you want. More so than a big down payment IMO.

tell me about it

my dad wanted to buy a new truck a few years ago, right, so he goes to the dealership WITH literally $19K in cash

the truck he liked was maybe $21K if that. the dealer wouldn't negotiate...dad just turned around and left :rotfl

how stupid is that
 
As my kids grow up, I'm finding that I'm getting a new appreciation for my statues and busts. My two and a half year old daughter loves going around and naming them all... In time, she'll start asking more questions about them. It's been more fun than I thought it might be to share some of my hobby interests with her.

:)
 
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tell me about it

my dad wanted to buy a new truck a few years ago, right, so he goes to the dealership WITH literally $19K in cash

the truck he liked was maybe $21K if that. the dealer wouldn't negotiate...dad just turned around and left :rotfl

how stupid is that

I also depends on the make of the car. When I bought my Tacoma 5 years ago, they were the hottest model on the lot and they could barely keep them on the lot. There was little room for negotiation, and I even said as much, and the dealer flat out said, "Look, I can barely keep these n the lot, and if you don't buy it, it will be sold by the end of the week, so I'm sorry I can't negotiate on the price." She was being honest.

I could probably get more wiggle room now buying a Toyota anything.
 
Waits for the repossession thread.....:cuckoo:

No chance in hell! If yur referring to me....... Dont hate Thrifty! :wave. All I know is, most of the statues SS releases only go up in value and the second you drive off the lot in a new car, yur car just lost thousands in value, so I would never sell off my whole collection for a car or stop collecting all together. Just sounds silly to me unless it was an emergency.

I hope my car runs smooth for a long time to come, because the thought of 400+ car payments after this car turns me off for sure. If I hit the lotto, then I wont mind so much :monkey3. If I still had my first car with it payed off; it really is crazy to think how much I could have banked all the years, but I love my car, so no regrets here.
 
I also depends on the make of the car. When I bought my Tacoma 5 years ago, they were the hottest model on the lot and they could barely keep them on the lot. There was little room for negotiation, and I even said as much, and the dealer flat out said, "Look, I can barely keep these n the lot, and if you don't buy it, it will be sold by the end of the week, so I'm sorry I can't negotiate on the price." She was being honest.

I could probably get more wiggle room now buying a Toyota anything.

This is so true. Back when I bought my car I wanted a specific color with a specific package. This definitely limited my negotiating power, but I could've passed and gone with something else. Two dealers in my area had them, and the first one I went to wouldn't even talk to me because I guess they thought I couldn't afford the car. After asking for a test drive and a bunch of other questions I got tired of being brushed off so I left and went to the other guys. They gave me the same crap, but at least this salesman was willing to talk to me and let me tell him what I wanted.

After talking with the guy I managed to get a deal with some money off the sticker price and without paying for the premium package. The next day after getting all the paperwork finished and drove off the lot I decided to go by the first dealership and show off the new car. Their loss. :lol
 
I also depends on the make of the car. When I bought my Tacoma 5 years ago, they were the hottest model on the lot and they could barely keep them on the lot. There was little room for negotiation, and I even said as much, and the dealer flat out said, "Look, I can barely keep these n the lot, and if you don't buy it, it will be sold by the end of the week, so I'm sorry I can't negotiate on the price." She was being honest.

I could probably get more wiggle room now buying a Toyota anything.

it was a used chevy silverado :slap
 
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