I paid with checks and I didnt think there were any real advantage or disadvantage to it. ( But when I was dealing with them, I didnt tell him that I will pay with checks even though he asked)

But the cashier was trying to push me to go through with LFS and offered me low 6 APR.

 

Being in the industry, the only restriction I'm aware of in merchant agreement's with VISA/Mastercard/AMEX (can't say for Discover, JCB and others) are "Minimum Purchase Requirements". (i.e. Sign at a 7-11 counter saying, "Credit card, min. purchase $5.00"). The other is charging a customer a "surchage" fee for using a credit card (of course, that's easily circumvented by saying there's a "cash discount" if cash is used).

Not only dealerships, but many body shops at least here in the Seattle area will only allow you to charge $500-$2000 for body work on a car. Rest needs to be check or cash.

Cheers,
Kermee

 

CC companies do not have limitations on the maximum amount merchant can take. Yes they are in violation when they demand you show your ID and when they have minimums and when they have add'l fees.

They also have a rule where you are not allowed to make partial transactions, meaning for a $1000 item you can't put $200 on one card, $700 on another, and $100 on the Amex. If the car cost $45k, you can't charge $9k to the card. But what you can do it make a DEPOSIT using your credit card. So the $9k becomes a deposit and you owe the bank $9k cash...not a title. So dealership has a maximum deposit rule which is ok.

The difference with purchasing a $40k car for $40k and a $40k rolex is the car requires a title. When you purchase a car, somebody holds the title or there is a lien on the title. If you charged $40k to a credit card, would the bank hold the title until you repaid them $40k? No, because you and the cc company have a different agreement. If you buy a $40k rolex, there is no title, the cc company doesn't place a lien on the goods...all you owe them is the money. They can't recover the rolex if you don't pay.

For a credit card transaction, the purchase agreement is your signature on the receipt and the terms you agreed to for card usage. For a car, the terms are spelled out in the retail installment contract or the purchase contract. For any credit card purchase, the transaction is completed at the time of the transaction (unless it's a deposit or a hold). If any performance has to come after the transaction, there is no contract unless it can be executed at an agreed upon future date.

Or something like that...I'm not a lawyer.

 

Is this a California resident law only and only for new cars? Last year I bought a used car from a dealership in California and had them ship the car to me here in Hawaii. Total I put $8,500 on a credit card. They had no problem and I got the car within a couple of weeks after purchase.

 

Bingo...you answered your own question.

 

That does makes sense though. I figure with a finance the loan company holds the title as collateral in case you default on payments. If you pay in full with a credit card the credit card company doesn't have your car as collateral. I guess they could sick the creditors on you, but they really can't repossess the car.

One way around that though is when those credit card companies give you those convenient checks with low rates locked in. Often I get rates like 0% until the balance is paid. I always wondered if I wrote myself a check for "Cash" I could buy a car with a really good interest rate

 

Can't speak for every credit card offer, but most of the time those convienence checks are charged as though they were cash advances, and are excluded from the special interest rate offers applicable to charges and balance transfers.

 

to the dealer paying in cash is the same as by check--you will not get any discount for that; in fact, they may have to file a report to verify the source of the cash (reasons people have plenty of cash in hand include money laundering and tax evasion--getting paid by cash under the table without filing for tax). The dealership wants to be in business for the long haul, so it's not going to break any law for you.

 

Your ability to use your CC has more to do with the dealer than the CC company. I don't believe that the CC companies would really care what you pay for or how many of it, provided you stay below your limit. The merchant (dealer) doesn't report what you bought. Just because there is a $40K charge doesn't mean it was a car, could be engines, rims, etc. If you can't pay your bills they will just take you to court and liquidate your assets to pay it off (ie car, furniture), like when they reposses your car to sell when you default. It's the dealers that don't want to pay for the CC transaction fees that eat into their profits, 3 - 5%. The most I ever paid a dealer with CC was $10K and that was 6K & 4K across 2 cards.

Those balance transfer checks would like any regular checks, and best of all it won't be considered cash advance. Just write a check to yourself, not Cash, and drop it in the bank. Even with the transfer fee (max $75) you will still be ahead of all the interest you won't be paying. The way to take out a loan would be by CC 0%... That's how I will be financing my next car.

 

Credit card companies would LOVE it if you paid for a whole car in cash. They charge a fixed % of the purchase price as their fee, so if they are able to land 3-5% of $40k (that is $1,200 to $2,000) with one transaction, they would love it. The dealer would NOT love to see that much money disappear from the profit they make on the car.

I'm actually surprised so many companies take credit card. I've never owned a business, but it has to hurt your profits. I get extra cash back on my card for "everyday purchases", meaning grocery stores, drug stores, etc., so I often charge amounts less than $10, which I would normally pay in cash, but I'd rather get the cashback so I use my card. But this has to be really bad for these companies that are now having 3-5% fees tacked on to their sales. Getting back on topic - it doesn't make sense for a dealer to take a hit like that.

Someone at work told me that it is actually illegal for a dealership to make you a different offer for the car based on your financing choice. It makes sense, because it's kind of like a broker saying, I want to sell you this house, and if you get your mortgage from my brother, I will cut you a discount. It's an anti-competitive practice. My old boss bought a Nissan Murano dirt cheap by calling around, getting a price based on a lease or loan, and then saying, you have to give me this price even though I am not financing through you, if you don't I will notify the state department of finance.

 

I'm just curious why anyone would want to pay for a car in cash????? If you have $40k in cash, you're better off putting $0 down and financing at a good 5% rate then investing your $40k in cash. If you invest wisely the profits you make the from investing will far outweigh any interest you think you may have saved. Cars are a depreciating asset....why would you throw $$$ at them???? I always lease with no money down and invest my cash. Bottom line is when you pay cash for a car you lose $$$.

 

I gotta say, if you charge a whole car to your credit card via convenience checks...somehow that's not right, it's bad bad news. Not only do you contribute to the massive amount of credit card debt this country is in, but aslo it can't be good for you personally. Check into the difference between secured and unsecured debt and then you may want to reconsider determining if you can actually afford the car. Anyone can gather enough credit cards and pay for a car but that doesn't mean they can't afford. Buying a car that you cannot afford is bad...always.

 

2 reasons i think:
1) some people they have so much money they don't really care
2) that's if you have for sure some good investment with more than 5% return gauranteed

 

I appreciate the advice , however I don't see the difference between financing by CC and by dealer/bank other than 0% interest rate. In any case, any money I freed by this financing will be used to invest. Not paying interest alone is already a gain.

I would use cash the same as I and others mentioned with the CC financing. Negotiate the best deal then tell them you have your own financing/cash, BUT you would be willing to finance with them provided they sweeten the deal AND no pre-payment penalty. If they do pay in full when the first payment is due. If not, then wip out your cash/check and be done with it.

 

Hopefully none of us were talking about maxing out every single credit card to buy a car. I think we were just talking in theory that about the very low fixed rates some credit cards were giving away and discussing if it was worth it. The only draw back I can think of is that it affects your credit score more negatively with revolving credit debt vs secure or non secure loans. Then again though, if one has enough credit to buy a $40K + car on his credit card his credit must be pretty damn good to begin with.

The other reason why I think this talk all started was the debate between paying in cash or financing and which would give you a better deal and if paying cash was worth it or not.