Used Truck Accessories – If you plan to buy a new or used vehicle for cash, there are advantages and disadvantages. But if you decide to pay cash, don’t let the dealer know first – the price of the car might jump to a thousand dollars. Before the pros and cons of using cash are discussed, let’s explain why dealers hate the word “cash.” This is just a lost opportunity to benefit from a car loan and it creates a difficult obstacle, if not impossible, to sell accessories, another income stream.
“Accessories sell very well if customers pay because you can say it’s only $ 5, $ 10, $ 30 per month more for accessories. But when you tell the customer it will be an additional $ 2,000 and he writes a check for $ 40,000, he says, ‘ah, I don’t need that,’ “said a dealer who asked not to be identified. In this case, the dealer had lost the opportunity to make a profit of $ 200 to $ 500 for accessories and maybe even more on an optional extra warranty that might sell for $ 2,500-plus.
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A car loan is another lost opportunity. Dealers generally generate 1 percent of the loan value to contact financial institutions and handle documents. Dealers make $ 300 with loans of $ 30,000, for example.
Add everything and that is real money that the dealer might not receive. It is important before buying a new car to do your homework – sticker vs invoice prices, incentives if applicable, your exchange rate, dealer reputation, etc. Calculate how much you expect to pay for the new vehicle. Again, don’t tell the seller beforehand that you plan to pay cash. Dealers can increase the price of a car by more than a thousand dollars to replace the lost profits from not selling accessories and extended guarantees and not handling loans.
Below are listed the pros and cons of paying cash for new or used vehicles.
Without interest payments: Without loans, without interest, without monthly payments – you will likely avoid spending more money than you can afford.
How to pay: If you buy a $ 45,000 SUV, of course you can bring a shopping bag filled with a $ 100 bill. However, under federal law, the dealer is required to notify the IRS of cash in excess of $ 10,000. This requires a name, address, etc., Lots of your documents. The dealer prefers to check the cashier for an amount exceeding $ 10,000 if you will use cash.
Use cash and loans: You plan to buy your first car, no matter whether it’s new or used for this example. You have cash to complete the sale. However, instead of paying cash, it is wise to get a loan for a portion of the price of a car transaction so you can make a credit history, assuming you have no history. It doesn’t have to be a big loan and you can pay it off quickly, say six months.
Home equity loans: As long as your home equity loan interest rates are lower than the interest rates offered by dealers or financial institutions, just do it.
Limited choice: It is indeed a good feeling to buy a car for cash but your cash resources may not be enough to buy a car or truck that suits your needs. That’s where a loan might be a better choice, giving you a wider choice of vehicles to choose from.
Low interest rates: Sometimes, a brand will offer low interest rates, there may be no interest at all on a new vehicle. Sometimes there may be a significant price discount if the buyer finances the vehicle through financial institutions related to the car maker. Passing this offer can be a missed opportunity.
Used vehicles: If cash will be used to buy a used vehicle, you must have enough money set aside to handle unexpected repairs and normal maintenance.
Don’t buy if you live from salary to salary: Some buyers are financially blackmailed, almost every nickel every month quickly disappears to pay bills. If available, does it make sense to use the rainy day savings, the retirement account to buy a vehicle to get cash? Probably not.
Investment opportunities: When you take cash from your account to buy a car, you reduce your investment opportunities in deposit certificates, mutual funds, individual stocks, etc. Loans may make more sense to save your investment.
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