I feel like I’m about to share some news that most people don’t know about purchasing a vehicle. If I’m wrong and you already know this, sound off in the comments on this post.

Dealerships prefer if you finance your car purchase.

Today, I’ll be breaking down everything that goes into the complex issue of buying a car, whether it be through cash or financing. Although a financial decision as large as a car comes down to your personal comfort levels, I’m here to help shed light on the benefits of financing vs. paying cash. Without further ado, let’s dive in!

What Do Dealerships Gain From Financing?

Many people believe offering to pay cash makes them more appealing to the dealership. This thought stems from the idea that cash presents less risk by avoiding credit checks and loan approvals. While a cash transaction may seem straightforward, this type of closing on a car is not nearly as beneficial as it seems for the dealership.

Why? It's all about how dealerships can make the most money. Through financing, dealerships make money through interest on loans, making sales people encourage this option the most. Although an all-cash payment is a great option for a buyer if they can afford it, no preferential treatment is given during a negotiation.

I Want To Pay In Cash… What Should I Do?

When it comes to financing versus paying outright in cash, the choice should come down to personal finance goals and what makes the most sense for your family. If you choose to pay for a car in cash, my biggest piece of advice is to hold off on sharing this information with your salesperson until the end of negotiations.

Why should you wait? If a dealership is under the impression you intend to pay in cash, they’re missing out on loan interest for the vehicle you’re purchasing. Although you have to tell your salesperson eventually, keep this card close to your chest until you have to.

After negotiations conclude, the total price will be final and you can now reveal your payment will be in cash without worry.

The Total Cost Comparison

When considering the overall cost of your car purchase, I recommend taking a step back to look at the big picture. Both financing and paying in cash are really big decisions, so weigh the pros and cons of both before entering the dealership.

Financing is a great option if manageable payments are your primary goal, but is more expensive overall when interest payments are included. On the other hand, paying cash avoids interest all together, but requires you to pay for the entire car at once.

No matter the choice you decide, remain confident in it! Although a dealership may try to sway you towards financing, the best option is the one that makes the most sense for your family.

How To Purchase A Car (& Feel Good About It!)

I know what you’re thinking: if I choose to pay in cash, how do I remain confident during negotiations? It’s all about feeling prepared! Once you’ve researched the make and model of the vehicle that’s best for your family, learning how to negotiate properly is the next step. Although your choice of payment cannot lower the price, manufacturer and dealership incentives can- you just have to look for them.

To learn even more car buying tips, check out How To Save At The Dealership!

I lay out every step in detail for finding incentives, learning how to negotiate properly, and knowing what’s best for you before stepping foot on the lot. Best of all, I offer a complete money-back guarantee, so it’s a win-win for you!

Do you have any negotiation tips at the dealership you swear by? Please let us know in the comments! And to keep up with all the latest when it comes to car buying, check out my latest posts:

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