Does Bringing Cash to a Car Dealership Matter?

Paying with credit is nice, but paying with cash means you'll pay less interest in the long run. Interest adds expense and time to your payments and can greatly increase the cost of the vehicle. Even if you don't have enough money to pay the entire bill, you can still cut down on your bills with a large down payment in cash.

Many car makers have incentive programs for clients financing a car through the company. For example, some offer $1,500 cash back and 0 percent financing for qualified buyers. If you've negotiated with the dealer and are ready to buy, check out the early payoff terms on such a loan. If there are low penalties or none at all, hold onto your cash and finance the car. Get the cash back incentive from the manufacturer, then pay off the loan in full in the first month. You make the most of your cash and give your credit a boost.

You may think dealers prefer cash, but they actually make more on a financed sale. Salespeople know shortcomings on the price can be made up in the loan terms. They're typically more willing to deal when they think you'll be financing. Once you agree on a price, and it's in writing, that's when you let the salesperson know you will pay with cash. It's too late then for the dealer to back out and you'll have secured the best price possible.

Cash can help convince a dealer to make concessions she otherwise wouldn't. One such concession is the "dealer holdback," an interest payment every dealer pays to manufacturers for time the car spends on the lot. It serves as an incentive for the dealer to sell quickly and a punishment for failure. The dealer has 90 days to sell the car to get the refund. If you show up with cash, they'll take it and collect the refund.