If I plan to buy a car in cash, should I let the dealer know?
Ideally you would negotiate a car price without ever mentioning: And other factors that affect the price. You and the dealer would then negotiate a true price for the car, followed by the application of rebates, followed by negotiating for the loan if there is to be one. In practice this rarely happens. The sales rep asks point blank what rebates you qualify for (by asking get-to-know-you questions like where you work or if you served in the armed forces - you may not realize that these are do-you-qualify-for-a-rebate questions) before you've even chosen a model. They take that into account right from the beginning, along with whether they'll make a profit lending you money, or have to spend something to subsidize your zero percent loan. However unlike your veteran's status, your loan intentions are changeable. So when you get to the end you can ask if the price could be improved by paying cash. Or you could try putting the negotiated price on a credit card, and when they don't like that, ask for a further discount to stop you from using the credit card and paying cash. "Yes you tell them.  I can say that I pay cash for all my cars and always get cars for lower than the TrueCar low-end.  There are basically two steps: go test drive, negotiate fully, leave (unless you are given a mind-blowing offer).  This may take you one to many dealerships.  It depends on how well you know what car you want and how much a dealership will negotiate.   you pick a night that another dealership that specifically has the car you want (or multiple - even better) is open and you go in 30-45 mins before they close.   Paying cash is key for this to work.  By the time you get to numbers they will be almost closed.  Their finance guy might be gone so you will get your salesman and a manager.  I will use my last car as an example.  Toyota Highlander 2015 with MSRB 32,995.  TrueCar at 29,795 with a good deal at 29,400.  I simply talked to my sales guy said I would like to walk out with the car tonight.  I have already talked to XYZ dealership and they offered me 28,500 - which is already below TrueCar low price.   I asked for $27,900.  Boom 10 minutes later car bought at 28,100. Cash is king.  The sales guy and manager will bite the bullet on profit for ease of sale.  Going in late is the key to using the cash.  You don't have the finance guys jumping in and you have less people to move through.  Also they know they have limited time to deal and if you walk off the lot there is less than 10% chance of you coming back - they want to close.  They are making minimal profit but doing minimal work.  With cash your sales guy is on your side because you are basically throwing him a couple hundred dollars at the end of a shift (where most would just be sitting around watching TV). Some other tips: be fair.  If they would have said 28,300 is our lowest that we can go and that's it.  I probably would have still got the car.  Dealerships will tell you their lowest price if you are close and you are still below it. since they didn't show me their lowest price I didn't budge much but still budged a bit to show good sport.   They brought their invoice number out to show that at 28,100 that they were going to lose $1500 on the car.  I made the manager laugh because my response was to bring up KBB and show the used car price for the car, which was minus $2000.  So I just said, ""Well you lost $1500 but I lose $2000 driving this off the lot.""  I then went back to $27,850 to meet in the middle of ""losing"" money.  This actually closed the deal.  Anyway don't ever believe any piece of paper they show you with numbers.  These dealerships get monthly bonuses on sales and that is a lot of their profit past selling your trade-in. If you actually value your money you would never be trading in a car to a dealer so if you are paying cash, sell your own car or at least take it to a place like CarMax which I don't endorse but better than dealer." "Ditto other answers, but I'd add there's a lot of psychology going on in a sale. If you're paying cash, you presumably have a pretty fixed upper limit on what you can spend. But if you're getting a loan, a large increase in the price of the car may sound like just a small addition to the monthly payment. Also, these days dealers often try to roll ""extended warranties"" into the loan payment. Most people can't calculate loan amortizations in their heads -- I'm pretty good at math, and I need a calculator to work it out, assuming I remember or wrote down the formula -- a dealer can often stick a piece of paper in front of you saying ""Loan payment: $X per month"" with fine print that says that includes $50 for the extended warranty, and most people would just say, ""oh, okay""." If you buy a car using a loan, the dealer gets benefited by the financing institution by the way of referring fee paid to the dealer by the institution, and that too if the dealer has helped in financing the purchase. Otherwise for the dealer it doesn't matter if one pays in full or through financing. The dealer is paid in full in either cases. Hence the dealer may slightly get disappointed that you are not taking a loan. In the UK at least, dealers definitely want you to take finance. They get benefits from the bank (which are not insubstantial) for doing this; these benefits translate directly to increased commission and internal rewards for the individual salesman. It's conceivable that the salesman will be less inclined to put himself out for you in any way by sweetening your deal as much as you'd like, if he's not going to get incentives out of it. Indeed, since he's taking a hit on his commission from you paying in cash, it's in his best interests to perhaps be firmer with you during price negotiation. So, will the salesman be frustrated with you if you choose to pay in cash? Yes, absolutely, though this may manifest in different ways. In some cases the dealer will offer to pay off the finance for you allowing you to pay directly in cash while the dealer still gets the bank referral reward, so that everyone wins. This is a behind-the-scenes secret in the industry which is not made public for obvious reasons (it's arguably verging on fraud). If the salesman likes you and trusts you then you may be able to get such an arrangement. If this does not seem likely to occur, I would not go out of my way to disclose that I am planning to pay with cash. That being said, you'll usually be asked very early on whether you are seeking to pay cash or credit (the salesman wants to know for the reasons outlined above) and there is little use lying about it when you're shortly going to have to come clean anyway.
Break the transactions into parts. Go to your bank or credit union and get a loan commitment. When applying for loan get the maximum amount they will let you borrow assuming that you will no longer own the first car. Take the car to a dealer and get a written estimate for selling the car. Pick one that gives you an estimate that is good for a week or ten days. You now know a data point for the trade-in value. Finally go to the dealer where you will buy the replacement car. Negotiate the price, tell them you don't need financing and you will not be trading in the car. Get all you can regarding rebates and other special incentives. Once you have a solid in writing commitment, then ask about financing and trade in. If they beat the numbers you have regarding interest rate and trade-in value accept those parts of the deal. But don't let them change anything else. If you keep the bank financing the dealer will usually give you a couple of days to get a check.  If you decide to ell the car to the first dealer do so as soon as you pick up the replacement car. If you try to start with the dealer you are buying the car from they will keep adjusting the rate, length of loan, trade-in value, and price until you have no idea if you are getting a good deal. As others have addressed the legality in their answers, I want to address the idea of the dealership being 'a middleman'. A dealership serves more of a purpose than just 'middlemanning' a car to a consumer. Actually, they consume a great deal of risk. Let's remember that a dealership is really an extension of the OEM, albeit independently owned and operated, the dealership must still answer to the brand they represent, if people have a bad experience with a dealership, a customer might go to another of the same brand, but more often than not they will go to the competition out of spite. Therefore, it's in the dealership's best interest to represent the brand as best as possible, but unfortunately that doesn't always happen.  While the internet has made a certain part of a salesman's role null and void, and since this is a finance (read money) Q/A site let's take a moment to consider the risk assume and therefore the value added by a dealership: Test Drive. A car is a huge purchase, and while it's okay to buy a pair of shoes online without trying them on, a car is a bit different of course, we want to make sure it 'fits' before we shell out several thousand dollars. Yes, you (meaning consumers) can look at car pictures and specs online, but if you want to see how that vehicle handles on your town's roads, if it fits in your garage and/or driveway, then you need to take it for a test drive. It's not feasible for OEMs to have millions of people showing up to car plants for a test drive, right? Scalability aside, some business that is handled in automotive plants are confidential and not for the general public to know about. A dealership provides an opportunity for those who live locally to see and experience the car without flying or driving wherever the car was assembled. They provide this at a risk, banking on the fact that a good experience with the vehicle will lead to a sale. Service. A car is a machine, and no machine is perfect, neither will it last forever without proper service. A dealership provides a place for people to bring their vehicles when they need to be serviced. Let's set aside the fact that the service prices are higher than we'd like, because the fact remains most of it is skilled (and warrantied) labor that the majority of people don't want to do themselves. Trade Ins. It is not in an OEMs best interest to accept a vehicle just to sell you another vehicle, especially if that vehicle is from another brand. Dealership's assume this risk, and often offer incentives to do so, hoping it will lead to a sale. That trade in was an asset to you, but is a liability to them, because they now have to liquidate that trade in, just so that you can purchase a car. Sure, you could sell your car yourself, and now you would assume that risk: What if your car is not in perfect shape, or has a lot of miles for it's age? Would it do well in the used car market? What if it takes too long to sell and you miss that Memorial Day car sale at the dealer? This might be okay for some, but generally speaking most people would rather avoid the risk and trade it in at the dealer toward the purchase of a new car rather than the headache of selling it themselves. I'm sure there are more, but those are the one's that immediately sprung to mind. Just like Starbucks, there are terrible dealerships out there and there are great ones, and very few of us venture to farms and jungles just for fresh coffee beans :-) I don't buy new cars anymore, but I've helped family members negotiate prices on new cars recently. There are various online services to see the average price paid, as well as the low outliers. I've looked at truecar.com for instance to see what others have paid within 50 miles of my zip-code. I think the only way for you to know you're being offered a good deal is to see if any of the other dealers that have not responded are willing to talk when you offer them $22,300 which the dealer above suggested was break-even point. If none of them respond, then you know you're really at the bottom of the negotiating window. If one of them does respond, then you can go back to that internet sales manager and ask why another dealership (do not disclose which one) is willing to sell it to you for less than $22,400 (do not disclose how much lower they offered to sell it for).  In my experience, most dealers will sell at or just below the break-even price at the end of the quarter so that they can beat other dealerships out for the quota. That gives you a week and a half to find the bottom price before going in on New Years Eve to seal the deal. "I read a really good tract that my credit union gave me years ago written by a former car salesman about negotiation tactics with car dealers. Wish I could find it again, but I remember a few of the main points.  1) Never negotiate based on the monthly payment amount. Car salesmen love to get you into thinking about the monthly loan payment and often start out by asking what you can afford for a payment. They know that they can essentially charge you whatever they want for the car and make the payments hit your budget by tweaking the loan terms (length, down payment, etc.)  2) (New cars only) Don't negotiate on the price directly. It is extremely hard to compare prices between dealerships because it is very hard to find exactly the same combination of options. Instead negotiate the markup amount over dealer invoice.  3) Negotiate one thing at a time A favorite shell game of car dealers is to get you to negotiate the car price, trade-in price, and financing all at one time. Unless you are a rain-man mathematical genius, don't do it. Doing this makes it easy for them to make concessions on one thing and take them right back somewhere else. (Minus $500 on the new car, plus $200 through an extra half point on financing, etc).  4) Handling the Trade-In  5) 99.9999% of the time the ""I forgot to mention"" extra items are a ripoff They make huge bonuses for selling this extremely overpriced junk you don't need.    6) Scrutinize everything on the sticker price I've seen car dealers have the balls to add a line item for ""Marketing Costs"" at around $500, then claim with a straight face that unlike OTHER dealers they are just being upfront about their expenses instead of hiding them in the price of the car. Pure bunk. If you negotiate based on an offset from the invoice instead of sticker price it helps you avoid all this nonsense since the manufacturer most assuredly did not include ""Marketing costs"" on the dealer invoice. 7) Call Around before closing the deal Car dealers can be a little cranky about this, but they often have an ""Internet sales person"" assigned to handle this type of deal. Once you know what you want, but before you buy, get the model number and all the codes for the options then call 2-3 dealers and try to get a quote over the phone or e-mail on that exact car. Again, get the quote in terms of markup from dealer invoice price, not sticker price. Going through the Internet sales guy doesn't at all mean you have to buy on the Internet, I still suggest going down to the dealership with the best price and test driving the car in person. The Internet guy is just a sales guy like all the rest of them and will be happy to meet with you and talk through the deal in-person. Update: After recently going through this process again and talking to a bunch of dealers, I have a few things to add: 7a) The price posted on the Internet is often the dealer's bottom line number. Because of sites like AutoTrader and other car marketplaces that let you shop the car across dealerships, they have a lot of incentive to put their rock-bottom prices online where they know people aggressively comparison shop. 7b) Get the price of the car using the stock number from multiple sources (Autotrader, dealer web site, eBay Motors, etc.) and find the lowest price advertised. Then either print or take a screenshot of that price. Dealers sometimes change their prices (up or down) between the time you see it online and when you get to the dealership. I just bought a car where the price went up $1,000 overnight. The sales guy brought up the website and tried to convince me that I was confused. I just pulled up the screenshot on my iPhone and he stopped arguing. I'm not certain, but I got the feeling that there is some kind of bait-switch law that says if you can prove they posted a price they have to honor it. In at least two dealerships they got very contrite and backed away slowly from their bargaining position when I offered proof that they had posted the car at a lower price. 8) The sales guy has ultimate authority on the deal and doesn't need approval Inevitably they will leave the room to ""run the deal by my boss/financing guy/mom"" This is just a game and negotiating trick to serve two purposes:  - To keep you in the dealership longer not shopping at competitors.  - So they can good-cop/bad-cop you in the negotiations on price. That is, insult your offer without making you upset at the guy in front of you.  - To make it harder for you to walk out of the negotiation and compromise more readily.  Let me clarify that last point. They are using a psychological sales trick to make you feel like an ass for wasting the guy's time if you walk out on the deal after sitting in his office all afternoon, especially since he gave you free coffee and sodas. Also, if you have personally invested a lot of time in the deal so far, it makes you feel like you wasted your own time if you don't cross the goal line. As soon as one side of a negotiation forfeits the option to walk away from the deal, the power shifts significantly to the other side. Bottom line: Don't feel guilty about walking out if you can't get the deal you want. Remember, the sales guy is the one that dragged this thing out by playing hide-and-seek with you all day. He wasted your time, not the reverse." There are many gas stations where I live that already have different prices if you pay for cash vs. credit.  In addition, some small businesses are doing this as well.  My wife bought a birthday cake from a bakery.  If you paid with cash, you saved 5%. Cash is very effective at getting a discount when buying from individuals (craigslist, garage sales, estate sales, flea markets, etc.).   I'll make an offer, then thumb through the cash while they consider it.   There eyes will dart back and forth between my eyes and the cash as they decide whether to take my offer. Car dealers do seem to be very unique.   The dealer I bought at recently said that 70% of their deals were cash purchases, JoeTaxpayer's dealer said 1% were cash purchases.   I've had good luck negotiating with cash for well-loved cars (under $10K) from both individuals or used dealers. I'm also looking for carpet for my house and the first vendor I went to offered at 5% discount if I paid up front (no financing). "It doesn't matter if you give the check to the dealer or your friend. But under NO circumstances should you co-sign your friend's car loan. Since the money you are giving is a loan, I highly, highly recommend you do the following: Requiring a signed promissory note shows you are serious about getting paid back, and gives you some legal protections if you are not paid back. If you go to a random small claims court on any given day, you will witness at least a few cases where one person says, ""it was a gift!"" and the other says, ""it was a loan!"". With a promissory note, it's a loan, period. Prepare not to get paid back, even with the note. It happens all the time. Think about what you will do if your friend misses a payment to you or never repays the loan. Will you forgive or get legal and try to collect? Again, do NOT co-sign the loan.If you do, and your friend does not make car payments, you will be 100% responsible and the lender will take legal action against you to collect." Find a mechanic in the area that will, for a fee, do a pre-approval inspection.  Then when you call the seller to inquire you can ask them to let you take the vehicle there as part of your test drive. I'm not sure how many RV mechanics there are that don't work for a dealership, and those that do may be less inclined to assist you in purchasing from a private party.  You could also have a friend or family member who is a mechanic or good with vehicles come along.  Also, the seller may not want to bother with the extra hassle, and if it really is a good deal, they likely won't need to.   Of course, the other option is to just test drive it and trust your gut.  This doesn't sound like a huge risk at 2K.  Even if it breaks down right away and can't be repaired for a reasonable price, you could scrap the vehicle and hopefully make up a significant portion of the purchase price.