This article is a summary of a YouTube video "Never SAY THIS at Car Dealerships in 2024" by CarEdge

Why You Should Never Tell the Dealer You're Paying Cash for Your Car

TLDRLearn why revealing that you're paying cash when buying a car can reduce your negotiating power and potentially result in a higher price. Dealers make a large portion of their profit from financing and ancillary products, so by taking away that potential profit, they are less motivated to give you the best deal. Keep your payment method flexible and discuss it with the finance manager after negotiating the out-the-door price.

Key insights

💵Telling the dealer you're paying cash reduces your negotiating power and potential discounts.

🚗Dealers make a large profit from financing and selling ancillary products.

💸Paying cash eliminates the opportunity for the dealer to make money on the back end of the deal.

🔒Dealers are more likely to negotiate and offer discounts when there's potential for back-end profit.

🐋Cash buyers are less likely to be seen as high-profit potential customers, resulting in potentially less attractive deals.

Q&A

Why do dealers make more profit from financing?

Dealers earn profit from the interest rate spread between the buy rate and the sell rate, as well as additional finance products.

Can I still negotiate as a cash buyer?

While you can still negotiate the out-the-door price, you may not receive the same discounts and incentives as a finance buyer.

Why would a dealer discount the vehicle on the front end?

Dealers may offer discounts on the front end to attract customers and make up for it with back-end profit from financing and ancillary products.

Should I discuss my payment method with the salesperson?

It's best to wait until after negotiating the out-the-door price and discuss payment methods with the finance manager to avoid limiting your negotiating power.

Can I still buy ancillary products if I'm a cash buyer?

Yes, as a cash buyer, you can still purchase ancillary products, but statistically, you're less likely to do so compared to a finance buyer.

Timestamped Summary

00:00Revealing that you're paying cash when buying a car can reduce your negotiating power and potentially result in a higher price.

03:41Dealers make a large portion of their profit from financing and selling ancillary products.

04:31By taking away the potential for back-end profit, dealers are less motivated to give you the best deal upfront.

08:00Cash buyers may not receive the same discounts and incentives as finance buyers, resulting in potentially less attractive deals.