Four Words You Should Never Tell A Car Salesman

In this blog post, I will talk about:

  • What you should never tell a car salesman
  • Should you pay cash for your car?
  • When you should run away from any car dealer

I don’t think anyone likes to go to the car dealership. I honestly dread my trips to the point that I like to simply buy my vehicles online. However, if you want to go to the car dealership there are four words you should never say when you arrive at the dealership.

Here are those four infamous words:

“I’m paying with cash.”

You see, lots of smart people like to save up their money in order to save on paying the interest rates on their auto loans. However, all car dealerships make their money on their financing. If you tell a car salesmen up front that you are paying with cash, the dealership will tack on “Bank fees” that usually equal about 5% to 10% of the sticker price.

So should you pay cash for your car? Well, there is an advantage to not having any payments. Therefore the decision is up to you. However, you have to be smart and have a strategy.

Therefore, this is what you should do if you plan to buy from a dealership with cash. First, if the car salesmen talks to you about financing, tell the salesperson that you will only discuss financing once you both agree on the final price of the vehicle.

Once you have agreed with the final price on the vehicle, you will be taken to the finance office. This is where the real sharks reside. Here the expert finance person will try to make you overpay for the vehicle through made up fees, long payment terms and more.

This is how it usually works. Most people think about how much they can afford each month. The finance person will usually hit that person’s monthly payment target but extend the payment terms to 60, 72 or 84 months.

If you are planning to pay with case, ask the finance person for the true final price that includes taxes and all the fees. Once you have the final price, then you tell the salesperson the following, “I will make a check payable to the dealership in this amount. You can call the bank and verify that I have the funds.”

At that point, the dealership will most likely take the deal. They won’t make lots of money on you but they will still make a profit. Remember, when you have cash, you are in charge of the situation. However, you only have leverage when the dealership gives you the final price.

If the dealership tries to add on fees after the agreed on price, then walk out the door. Chances are, they will stop you and accept the cash offer. The dealership will take over nothing. This is especially true if you are looking to buy a vehicle that is not a hot seller. That’s because if the new vehicle doesn’t sell in its first model year, the price of the vehicle will depreciate.

Having cash for a vehicle is an excellent way to avoid paying those crazy interest rate fees. Just remember to maintain your leverage throughout the negotiation process. If you don’t like to haggle, you can go to a “no haggle” dealership like Carmax. Just be aware that Carmax does charge more than other dealerships. HOwever, if you are a poor negotiator, you may be better off than dealing with sharks at other dealerships that can take you for a ride.

Buying a vehicle should be a fun experience. Just remember to completely research the vehicle you want. Know the vehicle’s average price and how much you should pay for it. The more information you have the better.

Bottomline: Should you pay cash for your car? Yes, but wait until you have settled on the final price before you let them dealership know.