Question about paying cash - viewed as positive or negative by dealer?
#31
Super Moderator
#32
Find out which way you get the best deal. If its financing, then go that route and when you get your first bill, just write a check and you get the best of both worlds. I have a very good friend who is high up in Lexus corporate who told me that when people finance and then pay the bill off after the first statement, the dealers actually have to pay the lender because the lender had to swallow all the costs to finanace and made no money on the deal. Just a tidbit to chew on.
#33
because it removes a profit center (finance revenue) from the transaction.
Is paying cash a smart idea? If I told you that I had a mythical investment opportunity for you and your $70,000 and I could just about guarantee that in 4 years it would be worth half that amount would you be a player? The good old US Dollar is a piece of paper and has no backing in tangible value and as such has eroded in purchasing power for decades. Real Estate values have quadrupled during that time. Are all of these older houses worth so much more? NO! The Dollar has gone down in value. We have generally had some inflation for many years so this means that you will need more Dollars later to buy the same amount of goods. This reduces the cost of borrowing as you are paying back in less valuable Dollars over time. Now if you could take the mythical investment above and get a 10 percent return on it while paying 7 percent for financing then it would be a wash after taxes. If you can get greater than a 10 percent return then you should keep your cash and invest. Leasing may give the most leverage of your money.
As far as negotiating by stating that you will stroke a check, it does not improve your leverage so resist the temptation. Some owners just don't like financing or leasing cars so for them it's simpler and that's fine too. When driving the LS460 these other trifles will disappear in the rear view mirror...
Rock
Is paying cash a smart idea? If I told you that I had a mythical investment opportunity for you and your $70,000 and I could just about guarantee that in 4 years it would be worth half that amount would you be a player? The good old US Dollar is a piece of paper and has no backing in tangible value and as such has eroded in purchasing power for decades. Real Estate values have quadrupled during that time. Are all of these older houses worth so much more? NO! The Dollar has gone down in value. We have generally had some inflation for many years so this means that you will need more Dollars later to buy the same amount of goods. This reduces the cost of borrowing as you are paying back in less valuable Dollars over time. Now if you could take the mythical investment above and get a 10 percent return on it while paying 7 percent for financing then it would be a wash after taxes. If you can get greater than a 10 percent return then you should keep your cash and invest. Leasing may give the most leverage of your money.
As far as negotiating by stating that you will stroke a check, it does not improve your leverage so resist the temptation. Some owners just don't like financing or leasing cars so for them it's simpler and that's fine too. When driving the LS460 these other trifles will disappear in the rear view mirror...
Rock
#35
Higher end dealerships will allow you to charge more...When we got the Maserati serviced with new fluids, tires, alignment, LABOR, etc the bill was 3500. They took a CC with no questions....
#37
yes, CC for service is no problem regardless of the amount, i was referring to the sales side, sorry for the confusion
#38
#40
Lexus Fanatic
iTrader: (20)
Is paying cash a smart idea? If I told you that I had a mythical investment opportunity for you and your $70,000 and I could just about guarantee that in 4 years it would be worth half that amount would you be a player? The good old US Dollar is a piece of paper and has no backing in tangible value and as such has eroded in purchasing power for decades. Real Estate values have quadrupled during that time. Are all of these older houses worth so much more? NO! The Dollar has gone down in value. We have generally had some inflation for many years so this means that you will need more Dollars later to buy the same amount of goods. This reduces the cost of borrowing as you are paying back in less valuable Dollars over time. Now if you could take the mythical investment above and get a 10 percent return on it while paying 7 percent for financing then it would be a wash after taxes. If you can get greater than a 10 percent return then you should keep your cash and invest. Leasing may give the most leverage of your money.
Real estate may go up in value but a lot of that has to do with exhorbitant realtor fees that home owners feel they at LEAST need to recoup in the sale combined with property speculation by investors - buying a ton of lots to drive up phoney 'demand' and then sell the lots for twice (or more) the price. Happens everywhere.
But you make a very good point that most people don't think of, and that's taxes - if you take that loan out and decide to use your cash elsewhere, you'd better be getting a goooood rate of return to make it worthwhile.
Personally I like to pay cash because I then at least know I can actually afford the vehicle. Of course I couldn't do that for the first few cars I owned, but I still put a lot down.
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