Long time lurker here. I really appreciate the experience many of you have and the great comments in this post.
I have a question that I have been trying to research, but have been unable to find a good definitive or, at least, general answer relating to buying a car.
The question is: can a buyer typically negotiate a better price by paying cash as opposed to using a seller’s low interest financing? (I am aware that a seller may lower the price if they backdoor the buyer with a higher interest rate – that isn’t the question here).
My specific facts are that I’m looking at used BMWs. The dealerships are advertising financing on used 2003s at 1.9% and 2004s at 2.9% APR. At those rates, they have to know they are going to lose money on the financing in view of inflation, increased credit risk now days and all. I would rather just pay cash, but my money would be much better off in my investments at those rates.
So, I was wondering if anyone knows a) if dealers will typically lower the price more if you pay cash instead of using this low interest financing and, if yes, b) is there any sort of general metric on determining how much more they would be willing lower the price?
Thanks in advance!
Never financed a car, so I can't speak from my own experience. However, some of my friends have said that they were able to get a better price on their car if they financed in the dealer (dealer thinks they can make more over the life of the loan, and so can drop the price of the car to for example invoice or below). The tactic some of my friends used is that they do the initial financing through the dealer and then pay off the loan early. Don't know if it actually works.
BTW: are you SURE you want to buy a used german car????
