How do you pay for a car?

Darkewolfe

I'm buying a new car for the first time. I can pay cash, but I can also get a 0% loan, and I figure I'll do that and then pay it off with the liquid cash before I'd have to pay any interest.

Assuming I still put down a cash down payment... How do I do this? Do I... write a check? Bring in a suitcase full of money? Do a wire transfer or cashier's check? Should I have the check in hand before finalizing the deal, or do I do that after?

Daimar

The car dealerships usually ask for a bank draft for the down payment. You can get it once you finalize the deal.

Quid

A cashier’s check is usually acceptable. Your bank should be able to issue you one. The easiest way to find out though is to just call the dealership you plan to buy the car from.

Marty81

Darkewolfe wrote: »

I'm buying a new car for the first time. I can pay cash, but I can also get a 0% loan, and I figure I'll do that and then pay it off with the liquid cash before I'd have to pay any interest.

It's worth checking whether there are any discounts or manufacturer incentives available for paying cash rather than taking the loan.

Gdiguy

I’m pretty sure we just did a standard check for the last couple cars I’ve bought

Also you can typically charge some fraction of a down payment to a credit card if you want (if you have the cash to pay off at the end of the month, it’s a free 1% or whatever your card is), I think the last couple times have been a maximum of a few thousand $ that way

see317

The question is, how many pennies will your bank allow you to withdraw at once?

Daenris

Our last car we just paid with a normal check. Because of the amount of the transaction, the dealership called the bank to confirm the account could cover it, which involved me talking to the bank employee to verify my identity, and then they answered a simple yes/no to the dealership whether the account had sufficient funds.

Artereis

If you can get a 0% loan, I'd put down as little as possible in the down payment.

Pyrian

My last car, I got a 4-year 0% loan without paying a cent down. Payments were kind of brutal, though, lol.

Donnicton

If it's a new car, depending on the model you chose, if there are any promotional or government rebates the dealership may also allow you to apply it to the down payment in exchange for signing over the rebate check once you receive it. For my current lease for example, there was a $1500 government rebate for hybrid cars and they allowed me to do that. This is of course at the discretion of the dealership, they may not even consider the option unless you've done business with them before.

Darkewolfe

Thanks all. As you indicated, they basically have you provide nothing immediately and sign some quantum loan documents assuming your credit will go through. Truly a bizarre experience from start to finish.

Malgaras

Darkewolfe wrote: »

Thanks all. As you indicated, they basically have you provide nothing immediately and sign some quantum loan documents assuming your credit will go through. Truly a bizarre experience from start to finish.

Just make sure that you are very careful with what you sign. Everything is probably on the up and up, but keep in mind that some dealers try to pull some shady shit with the "quantum loan" documents as you put it.

Darkewolfe

Yeah, I mean. Like I said, I can pay cash for the whole thing, so if anything moves a cent I'll just return the car and buy from the next dealer down the road.

evilmrhenry

One potential issue with having a loan vs paying cash is that if you have a loan, they will probably require you to have insurance on the car itself, instead of just liability insurance. If you were going to do that anyway, that's fine, but if you weren't planning on that, that is an extra expense.

Darkewolfe

Thanks, yeah. I'm solid on everything except how the initial deposit transaction is usually done! All set.

Burtletoy

Also, be aware, if you bring that much cash with you, and then get pulled over for speeding or driving with a broken headlight, that means the cops can and probably will steal all your money. I don't recall the amount off the top of my head, and I'm having trouble finding it. I think its anything over $5000? But, yeah, you should never carry that much cash anywhere. If you don't get robbed by the bad guys, you can still get robbed by the good guys.

Since 2008, thousands of police agencies had made more than 55,000 seizures of cash and property worth $3 billion under a Justice Department civil asset forfeiture program, which allowed local and state police to make seizures and then share the proceeds with federal agencies.

A Washington Post investigation in 2014 found that state and local police had seized almost $2.5 billion from motorists and others without search warrants or indictments since the terrorist attacks of Sept. 11, 2001.

The Wolfman

I went through a similar experience a few months ago, buying a house and dealing with transactions in the 5 digit range, everything paid for in "cash". And yeah, bank draft/certified cheque is the name of the game. You just go to the bank and ask for one, and you'll have to give them the name/organization to make it payable to, which the dealership should give you. Functionally speaking they're just fancy, more secure cheques, due to their nature the money is guaranteed to be there.

Veevee

I doubt you'd have to worry about this since it's a "prey on the poor with bad credit" tactic, but 0% loans I've seen in the past have had some crazy requirements like payments only accepted on specific days, miss a payment and interest is applied retroactively, and not being able to pay off early without a penalty. Make sure you read and fully understand the terms before actually accepting any loan.

Personally, if I had the cash to outright buy a car, I'd do that instead of getting a loan. If nothing else, paying cash now would make a possible catastrophic event that could happen in year 2 of the loan a lot less catastrophic.

twmjr

one thing to throw out there -- the last couple of times I've gotten a car, I've done my down payments on a credit card. if you are buying the car outright, this may not be possible (depending on your credit limit), but if you're just doing a down payment and you've got the cash on hand, get some extra card rewards while you're at it.

Elvenshae

If someone is willing to let me hold on to my cash at no charge, I would definitely do so.

I can’t think of a situation where I would have been better off paying for a car in cash vs a 0% loan.

Djeet

Elvenshae wrote: »

If someone is willing to let me hold on to my cash at no charge, I would definitely do so.

I can’t think of a situation where I would have been better off paying for a car in cash vs a 0% loan.

In every major purchase (4 digits+) I've done in the past 10 years, paying cash outright has always netted a decent discount to the net price with 0% financing. So if you can take the liquidity hit, then you may benefit in the long term. You will need to be comfortable dealing with large sums of cash or cash equivalents.

Darkewolfe

I definitely checked the terms of the loan. There's no early pay off fees or anything. There was all sorts of scummery with the transaction, but I went in extremely well prepared, to the point that it really annoyed the sales guy. I'm pretty sure I got a decent deal. Ultimately I just wasn't sure what sort of payment device to walk in with. The answer was nothing at all.

MichaelLC

I think car threads are like pet threads: must post pictures.

Elvenshae

Djeet wrote: »

Elvenshae wrote: »

If someone is willing to let me hold on to my cash at no charge, I would definitely do so.

I can’t think of a situation where I would have been better off paying for a car in cash vs a 0% loan.

In every major purchase (4 digits+) I've done in the past 10 years, paying cash outright has always netted a decent discount to the net price with 0% financing. So if you can take the liquidity hit, then you may benefit in the long term. You will need to be comfortable dealing with large sums of cash or cash equivalents.

Sorry - I should've specified "at the same price."

I usually have my price already set before I go in.

Pyrian

Djeet wrote: »

...paying cash outright has always netted a decent discount to the net price with 0% financing.

What about the investment opportunity cost?

Djeet

Pyrian wrote: »

Djeet wrote: »

...paying cash outright has always netted a decent discount to the net price with 0% financing.

What about the investment opportunity cost?

I think this is getting a little academic, but if I can save $1K on the front end at the expense of $25K more capital upfront, I'd take that deal any day. But I'm a conservative investor. Real savings means more to me than unknown potential upside. And of course ...

Djeet wrote: »

if you can take the liquidity hit

Anon the Felon

Marty81 wrote: »

Darkewolfe wrote: »

I'm buying a new car for the first time. I can pay cash, but I can also get a 0% loan, and I figure I'll do that and then pay it off with the liquid cash before I'd have to pay any interest.

It's worth checking whether there are any discounts or manufacturer incentives available for paying cash rather than taking the loan.

I helped my mother in law purchase a brand new Honda about three weeks ago. We asked if there was a cash discount, and they kind of chuckled and said "No, no there is not."

When we inquired deeper, the long and the short of it is: Why would they discount the price of the car any further, only to lose out on the profits from interest. The finance guy and sales guy we talked to were under the impression that the practice of "cash discount" has pretty much disappeared, since it's a benefit to the consumer only. These days, it's very easy to repo or otherwise put a delinquent on collections. Less risk than the extra money they'll make in interest.

Our logic was this: Take a loan, and pay whatever you want as a down payment to secure the lowest rate they'll give you. Let the load ride for 6 months, then pay it off in order to get the positive bump to your credit score. Taking a loan and paying it off within 30 days is less positive (and positively negative) then having a list of consistent payments on your credit.

kaliyama

In figuring out how to price cars, I recommend everyone use this service: http://fightingchance.com/. It has up to the date info on dealer incentive and pricing structures, plus general advice on how you should negotiate for a car. I've used it twice and saved thousands on what I otherwise would have paid each time. The second car I bought was a CR-Z. I sold it to a dealership when I moved about six months after I bought it, and I actually got about $500 back on top of extinguishing the loan because the price I negotiated built in the off-the-lot depreciation.

Darkewolfe

Cash discounts on new cars is, as far as I could tell from a significant amount of research, totally not at all a thing. The guys who sell the car are not even really the same company as the financing guys, they're a federated org.

This thread can be locked, my question is super answered!