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Cash Is King When It Comes to Cars

TeamSugar member RosaDilia just financed a new ride and put 20 percent down to secure her loan, and her comment about it not being easy (despite having a good credit score) coincided with a New York Times piece about the issue.

Since July, the average down payment has gone up by about $1,000 for non-luxury vehicles, from $4,946 in the first seven months of the year to $5,915 by the end of September. With credit scarce, many car buyers are foregoing a down payment altogether and simply paying cash for their vehicles.

Typically more than 90 percent of buyers use financing, but at the end of September, 31 percent of all non-luxury car sales were cash deals. The all but dried up credit market is debilitating to already struggling dealerships who are having trouble even getting financing for buyers with the best credit.

Source

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bchicgrl bchicgrl 7 years
I'm not looking forward to car shopping now after all these potential issues, I was able to finance a car with not so perfect credit a couple of years ago and now with my credit alot better it seems like it will be even harder. Hopefully with a down payment and my car's trade in which is still around 3k it'll be easy. *fingers crossed*
Spectra Spectra 7 years
I don't believe in having a car loan, so we always pay cash for our cars. It was pretty funny...when we bought our Saturn, the saleswoman asked us about financing and we just wrote her a check for the whole thing. She was like "Oh, you're buying it outright? That's a pretty good idea, actually". It makes sense, since cars are one of the fastest-depreciating things out there that you can own.
dsanghera dsanghera 7 years
We originally ordered our new car December, and when it arrived in February, the dealership pushed really hard to get the financing processed through their system. they were told firmly several times that we do not want them to run our credit as we were pre approved through our credit union. All we had to do was take a purchase order to the Credit Union to finalize everything. They promised they wouldn't, but I'll be darned if they didn't come back in the room and say they tried to submit it to our credit union and it was declined. I was not happy. They tried to say it was because that way they could get the money transferred that night & we could take our car home rather than waiting until the next day. Well when we talked to our Rep at the Credit Union the next day she explained that it was denied to them because we already had an open approval. She also explained that the reason they tried to push it through their system was that they do indeed get a kickback if they can finance through their system. They actually don't like us pre-approved shoppers because it limits their earning/commission potential.
Berlin Berlin 7 years
bplane, it's far easier to buy a car right now if you're going the cash way...they are desperate to get rid of cars b/c so many dealerships aren't selling any and are going bankrupt or selling their business b/c they can't afford to keep it up. So if you have the cash for the car, find the one you want online, then go in, say you'll pay *this* much to walk out the door with it, in cash, all fees included. Go a bit under what you plan so that they can feel they have some power and negotiable leeway, but have a price that you won't settle for, and if they won't do it, don't worry about walking out and finding another dealer down the road who will...this time you have all the power in your hands!
bplane bplane 7 years
i'm actually in the process of buying a new car right now. i'm still looking at dealers and pricing cars, but my plan is to pay all in cash and forego the financing altogether because it would be easier to knock out the purchase and not have to deal with another monthly payment. i'm terrible at car negotiations, so do ya'll have any tips??
ilanac13 ilanac13 7 years
i think that it's going to be hard for ANYONE to get a car these days then huh? my credit is pretty good but seeing as how that doesn't seem to matter, i don't know what i'm going to do when my lease is up in a year and a half. hopefully the economy will settle down a bit by then so i can get a new set of wheels. i think that i'll have to see what the situation is with financing and leasing at that point.
valancyjane valancyjane 7 years
hippiecowgirl, I think it has something to do with where you're financing, too - when we bought our car in the spring (and financed through my insurance company), we heard that they get a bonus if you finance with their in-house company as opposed to your own bank. Back on topic ... I've seen dealers around here offering 0% financing. If you can qualify for that rate you would be doing very well.
hippiecowgirl hippiecowgirl 7 years
I've heard that it's better to settle on a price with a car dealer before you announce that you're paying case. Maybe it's a total myth, but I've been told they'll drop the price more if they believe you're financing because they're also getting interest. :shrug: I'm glad I bought my new car before the crunch. I have very strong credit, but my friend who is a manager at a car dealership said people with near-perfect scores are still being denied. Sad.
Shopaholichunny Shopaholichunny 7 years
*way
Shopaholichunny Shopaholichunny 7 years
This is a GREAT idea. My parents actually told me that this is the BEST to buy a car. They paid my downpayment on my car with cash.
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