If you are buying a vehicle from a private seller, you might be more likely to get the price you want if you bring cash to close the deal. However, if you are getting a car from a dealership, cash isn’t always king.

Paying With Cash Won’t Give You Negotiating Leverage

Many times I’ve heard this from car buyers: “ I don’t know why the dealer wouldn’t accept my offer. I was paying cash!”

Unlike private sellers, most dealers would prefer you to get a loan for your purchase. Often dealers make a little bit of money of the loan that they give you. This is known as “dealer reserve” and it works basically like this: you get approved for a 60 month loan 2.5 percent, the dealer tells you that you were approved at 3.5 percent. If you accept the the 3.5 percent loan the dealer pockets the difference. This is all perfectly legal and very common.

If you bring in outside financing, whether it’s your own money or a check from an outside source like a credit union, the dealer loses that opportunity to make the reserve. In addition, cash buyers usually get to bypass all those finance and insurance spiels about how you need to “protect your investment” with an extended warranty, service plan or any other add-ons. These products bring a lot of profit to the dealers, so if they know right away they can’t make any money off you from F&I, they may be less likely to cut a good deal on the car itself.

You Might Be A “Cash Buyer” Even If You Get A Loan

Most buyers who are paying with cash are not rolling into the dealership with a suitcase full of wrapped bills, but some choose to use their savings and pay for a car in one lump sum rather than take a loan. However, most dealerships consider you a “cash buyer” if you are using a payment method not financed at the dealer. A common example is someone who uses a check from their bank or credit union.

If you’re paying for your car with your own money, usually the best bet is to get a bank check also known as a cashier’s check. Many dealers will not accept personal checks as they don’t want to take the risk of a personal check bouncing after you drive off with your car. Before you take delivery of your vehicle, I recommend speaking with a manager at the dealership to see what payment method would work best.

A Good Dealership Won’t Care If You Are A Cash Buyer

Recently I described some warning signs of a shady car dealer and mentioned that there are basically two kinds of stores: those that only care about taking every dime you have regardless of whether you return, and those that understand the long game of a fair deal and good customer satisfaction.

While some dealers aren’t so welcoming to cash buyers, a smart dealer knows that if these customers are treated right it will often mean a quick sale and a better likelihood of good survey scores. Also, if a dealer knows they have a cash buyer they don’t have to worry about the deal falling through because the customer didn’t qualify for a loan. One of the worst scenarios for a salesperson is to spend hours working a deal only to have it unravel in the finance office. If you’re shopping at a dealer that serves a lot of “credit challenged” customers, they may be relieved to have someone that has the money ready to go.

The question that I get frequently from car buyers is – “Should I tell the dealer that I’m paying in cash?”

I used to tell people to just focus on the price of the car and not disclose the fact that you are a cash buyer until the last minute. However, since some incentives and discounts are tied to financing, such as a zero percent interest loan or a rebate scenario, I’ve adjusted my advice.

If a dealer asks how you are going to be paying for the car, try the following – “I will most likely use my own financing, but I would be open to other other options if they are favorable. However, give me price quotes that are based on a cash deal.”

Paying With Your Own Money Now Might Make It Harder To Get A Loan Later

Unless you have boatloads of cash lying around, sooner or later you are going to have to play the credit game. For most people, there will be several times when they have to borrow money to make a purchase. If you play the credit game wrong and get in over your head with debt, you can be in for some financial trouble. On the other hand, you can also get into a tough spot by opting not to play at all.

Some people seem to think that no debt equals good credit. The reality is that no-debt will not bring down your score, but it won’t improve it either.

Without getting too deep into how exactly your FICO score is calculated, remember that your credit worthiness is basically your ability to borrow money and pay it back. The better your track record with taking out loans and making payments on time, the better your score will be. While an automotive purchase with cash does not have a direct negative impact on your score, not taking any auto loans can make it difficult when you actually need one.

Not long ago, I had a customer in his 40s who only bought used cars in the $8,000-$10,000 range with cash. He did this for a long time and then decided to purchase a new car, because he had no history of regular payments on an auto loan, he could not qualify for a low interest rate. He had the ability to borrow money earlier in life and pay it back, but chose not to thinking that paying in full was the more responsible move and it probably was from a purely financial perspective. However, it seems that the lending agencies penalize you later for not taking those loans out.

Even If You Can Pay In Full, It Might Be Smarter To Take The Loan

If you absolutely hate the idea of having car payments, then by all means drop down the cash and drive away free and clear. But with many automakers offering zero percent financing or really low interest loans, you may not want all your money tied up in one place. Instead of pulling thousands of dollars from your bank account, if you can take advantage of cheap financing, that money might be better used for things like an emergency fund, investments, home projects, or paying down other debt that carries a much higher interest rate.

Also, some dealers will offer extra discounts if you finance through them. In these scenarios the interest rates aren’t always the best, but you can take advantage of the discount then make a lump-sum principal payment and wipe out the loan.

For example, I had a client who was going to purchase a new Toyota Camry and pay it off in full. The dealership offered an additional $2,000 discount to take one of their loans, at a not so great 4.5 percent APR. However, because his state has no pre-payment penalty for auto loans, he took the loan, got the discount, made payments for two months, then wrote a check for the balance of the car.

The loan was wiped out and he saved two grand on his car. Of course, this strategy only works if you have the cash to pay in full and your state does not have prepayment penalties. You don’t want to be stuck with a higher interest loan in the long run especially if you can qualify for something better.

Whether you are paying with money you have saved up or walking in with a check from your credit union, being a “cash buyer” can give you an edge at the dealership. Just be sure to examine all the angles to see what financial option is most beneficial for your purchase.

(Image: Getty)

If you have a question, a tip, or something you would like to to share about car-buying, drop me a line at AutomatchConsulting@gmail.com and be sure to include your Kinja handle

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Most fleet managers know that vehicle maintenance takes two forms: Scheduled and Unscheduled.In the same way that regularly scheduled health checkups can detect and fix minor medical problems before they become big ones, scheduled preventive maintenance can help prevent, detect, and repair small problems before they become serious and expensive issues.

On the other hand, unscheduled checkups – for both you and your vehicles – usually only happen after some sort of breakdown. They’re almost always more expensive than routine checkups, involve significant “down time,” and may have been prevented with routine, preventive maintenance. Developing and implementing an effective fleet maintenance plan can be easy. There are tools and technology available that can make it easier than ever before. But it will help save your company plenty of time, frustration, and money. To quote Benjamin Franklin, “An ounce of prevention is worth a pound of cure.” When developing your fleet’s maintenance plan, ask yourself these five questions:

  1. What should be covered in the preventive maintenance checkup?
  2. Who will be responsible for preventive maintenance service?
  3. When will the service take place?
  4. How can you simplify your recordkeeping?
  5. Where can you find more information?

Now, tap into these top 5 tips to keep your fleet and maintenance plan running smoothly.

What should be included in routine preventive maintenance service? 

Tip #1 – Develop a comprehensive maintenance checklist for your vehicles. Many checklists include these items, but you’ll want to edit yours based on your fleet’s needs.

  • Engine oil and filter changes
  • Transmission fluid
  • Fuel system
  • Cooling system
  • Engine and transmission mounts
  • Drive shafts or CV joints
  • Belts and hoses
  • Tune-ups
  • Electrical system components
  • Braking system
  • Steering and suspension system
  • Tires, wheels, and rims
  • Exhaust system
  • Undercarriage and frame
  • Exterior and interior lights
  • Body, glass, and mirrors
  • Windshield wiper system
  • Horn
  • Seatbelts and seat structures
  • Fluid leaks
  • Auxiliary systems

Who will be responsible for preventive maintenance?
Tip #2 – Make this a team effort between your drivers and your repair technicians. Your drivers are the first line of defense against unexpected breakdowns and repairs. It’s critical that they immediately report any vehicle problems to help keep your vehicles on the road. Drivers can and should be trained to monitor basic vehicle safety items (tires, brakes, steering, etc.); vehicle performance issues (including misfires and rough idling); and miscellaneous items (such as the heater or radio). Your repair technicians – whether in-house or outsourced – can perform more detailed inspections on each vehicle’s components and systems. If you outsource repairs, be sure to supply the vendor with your own preventive maintenance checklist. Shops may focus on breakdown maintenance, not preventive maintenance. When should preventive maintenance take place?
Tip #3 – Examine both your routine and unscheduled maintenance data to develop a maintenance schedule that works for your fleet. Miles traveled, engine hours, fuel usage, and calendar time are the typical guides used to create a schedule. By also tracking the number of breakdowns, jumpstarts, tows, and emergency repairs, you might see patterns that require adjustments to your schedule.

How can you track and simplify record keeping?
Tip #4 – Take advantage of technology. If you’re still entering and tracking data manually, seriously consider upgrading to a digital system. Manual systems can be tedious and time-consuming, no matter the fleet size. Computerized systems are a more efficient method for compiling reports, allowing you to make faster, better decisions. Telematics allows you to examine your drivers’ performance, so you can offer important feedback and make recommendations. The technology you need is out there and it can be surprisingly affordable; a little research and legwork from you can make your job much easier.

Where can you find more information?
Tip #5 – Go online for additional details about fleet maintenance schedules. Here are a few informative sites to get you started:

Finally, don’t forget the WHY – Why should you spend so much effort on a fleet maintenance plan? The time you spend now to develop your fleet’s preventive maintenance plan could save your company a considerable amount of lost time in the future. In addition, the money you spend on implementing a preventive maintenance plan will be small in comparison to what you could spend on unscheduled, preventable repairs. In this case, a dime of prevention is definitely worth a dollar of cure.

By user / Fleet Management / / 0 Comments

Posted 05 April 2016 by Stacey Papp

Maintaining your fleet is one of the most important things you can do for your business. Everyone knows the obvious ones – regular oil changes, checking fluids and tire wear, replacing spark plugs – but there are other ways to keep your fleet in tip-top shape that might not come to mind when you think of traditional vehicle maintenance.

Keep the pressure on. If tires are underinflated, there is more contact and friction between the tire and the road, which wears the rubber faster, makes the engine work harder, and uses more gas.

Tear it up (safely). Head out to the highway, and get the vehicle up to 70 miles (make sure you’re following the speed limit though!) per hour for 10 miles once a month. This will evaporate any water and gas buildup in the engine and exhaust system.

Don’t just coast along. Keep the vehicle in gear. Coasting in neutral may improve gas mileage by a small amount, but it puts more work on the brakes, leading to premature – and pricey – repair costs.

Show your interior some love. Cleaning the dashboard, doors and seats regularly will help them last longer, and also makes for a more pleasant driving environment.

Get moving. Recent studies have found that idling your vehicle to warm it up on cold days isn’t as effective as warming the engine by actually driving.* Idling in the cold not only wastes fuel, but also strips oil from engine cylinders and pistons, creating more wear and tear on the engine.

Brake – then park. Putting a vehicle into park and then activating the parking brake causes the vehicle to settle back, putting unnecessary pressure on the transmission. With the vehicle still in drive and your foot on the brake, pull the parking brake. Then put the vehicle in neutral and release the foot brake before shifting to park.

Don’t forget your filter. The oil filter traps dirt – particles down to 10 microns in diameter, in the case of today’s top-of-the-line filters – that would otherwise harm your engine. Replace it every time you change your oil so the fresh oil doesn’t get mixed in with the old.

Stay thirsty. Always make sure you have at least a half-tank of gas during cold weather. Otherwise, any space above the fuel in the tank fills with moist air and condenses to water in the cold. Water is denser than gasoline and settles to the bottom of the tank. If enough accumulates, it will move through the fuel line to the engine.

Keep these tips in mind and share them with your drivers, and your vehicles should last longer, run better and be less prone to sticky maintenance issues.

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