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wonderpup

Cash Is King?

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I am in the process of buying a modest used car and happen to have enough saved not to need to finance the purchase. Once upon a time this might have been viewed as the actions of a wise and frugal man- to actually save money first in order to make a purchase.

Foolishly I imagined my bargaining position regarding the various used car sales persons I have encountered would have been strengthened by my ability to put real money on the table- but I was mistaken.

These guys do not really want my cash- what they want is for me to take out credit- why? Because for every credit agreement they sign a customer up to they are rewarded with a bonus.

So in the brave new world of modern economics it is the ability and willingness to take on debt that is rewarded- not the ability and willingness to save money in order to make the purchase with actual cash.

So it is I who is the pariah- my indecency in not seeking to indebt myself is looked upon with something akin to disgust. What is wrong with this person who does not seek to indebt himself?

In short in seeking to fund my purchase with actual earned money instead of wealth borrowed from the future I am not entirely normal. I am an aberration- a deviant of suspect character.

In my naïveté I had imagined that the people who sell cars would derive their profits from the selling of cars- yes I know, ridiculous right? In reality-of course- they derive their profits mainly not from the selling of cars but from the selling of debt.

So debt- once the humble facilitator of commerce has now become the end product- the goods on display in the showrooms are mere intermediaries, the necessary soil in which the seeds of debt will be planted- then comes the Harvest.

Perhaps I am making too much of this but it seems to me that somewhere along the line we crossed a line, we reached a tipping point in which finance ceased to be the servant of the economy, and became it's master.

We live in the world the bankers made- and they are truly the masters of our universe- because they control the most valuable and vital resource on the planet- not oil nor food but debt- without debt and it's perpetual and miraculous recreation we would all starve- not for lack of food but for lack of the means to organize it's production and distribution.

It's not money that makes our world go round- it's debt. Ask any used car salesman who his most valued customers are- and he will tell you; those who take on the most debt.

I can't help feeling that this will not end well.

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All that flowery shit and all you mean is debt is not a means to an end but an end in itself?

I see that my detailed and well written post has succeeded in bringing about enlightenment grasshopper.

you are welcome. :D

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I experienced this recently - I bought a brand new motorbike (a mid price Honda) this summer, the sales guy gave me that look of incredulous disappointment mixed with bewilderment and concern when I said I'd pay in cash. That look the hire car desk give you when you decline the ridiculous excess insurance that costs as much as the hire car.

The bike salesman still tried to go through all the PCP deals etc - only 4.something % pa blah blah. I told him I wouldn't be interested at anything less than -3% (!)

How long until you get a discount for non cash purchases?!

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Good post, wonderpup.

I bought a used Nissan 4 years ago for cash from a Kia dealership. Sadly I didn't get any £ knocked off the car for paying in cash. I insisted that the car would be paid for in cash and to be fair he didn't quibble...the Nissan was the cheapest car on their used forecourt at that time. Got £250 trade in for the ropey Escort I traded in (see my avatar) which I was happy with.

One would have thought that these salespersons would be glad to have sold the car at a profit for cash. Plus not have to to faff about with anapplication for finance and credit checks. <_< Move onto the next customer - simples.

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When I bought a new car, last year, the manufacturers were offering special discounts and terms linked to finance which were so good that it made sense to take the finance and pay it off in cash after a month.

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I suspect that credit is just a convenient extra to sell too. It helps to sell the cars and makes more profit.

Cash is ideal for keeping things off the books, but it is likely of little use to the dealerships otherwise. They will get instant cash from the factoring companies anyway.

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When I bought a new car, last year, the manufacturers were offering special discounts and terms linked to finance which were so good that it made sense to take the finance and pay it off in cash after a month.

With the new CCA regulations you have an automatic right to pay off any credit agreement in full and incur no interest (doesn't apply to mortgages obviously or to "hire purchase" schemes).

Edited by goldbug9999

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I bought a new Fiat a few years ago. Paid cash but the salesman still insisted on talking me through the Key Facts document. Which of course had £0 on credit, 0%, £0 total repayment printed on it. Despite my protestations, he said he had to explain it to me as it was "the law".

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I see that my detailed and well written post has succeeded in bringing about enlightenment grasshopper.

you are welcome. :D

I also didn't think you were trying to post a car buying thread but the other literal members of the forum have picked it up and run with it.

Even I have noted this in the past, we live under a cloud of our own making that we are made to fear more than natural disaster.

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you are right, bigger dealerships don't want cash

nor do they really want immediate payment in full by debit card by the buyer at the point of purchase

they want to sell finance, gap insurance, paint protection etc.

you can always buy the car at the screen price, or maybe a bit less if you negotiate properly without, but the dealership will try hard to make more money out of you by selling you more profitable stuff

if you want the very best value for real money cash, buy privately or, at least from a smaller dealer where you are talking with the owner

whether that is a better deal than a manufacturer incentivised financed deal can be surprisingly counter intuitive

the tiered incentive schemes for dealerships can mean that they can sometimes be better buying a few cars at full retail themselves to nudge into the next tier of reward from their franchisor

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I bought a new Fiat a few years ago. Paid cash but the salesman still insisted on talking me through the Key Facts document. Which of course had £0 on credit, 0%, £0 total repayment printed on it. Despite my protestations, he said he had to explain it to me as it was "the law".

Same, here, I (last year) had to replace my car,(destroyed) and paid cash(direct payment)...got about a £1000 off the sticker price and some extras thrown in on the used replacement, but before we could go to the accounts office to pay, we had the lecture (Toyota Policy it was said) about finance, extended cover, gap insurance and something else.

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I am not surprised they didnt want paid in cash, because it costs a fair bit to bank the notes & coins, and they might get hassle about proceeds of crime etc. They would much prefer a bank transfer or cheque I would have thought.

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My experience exactly - 5 years ago I took a car for a test drive and the kid salesman treated me like a Sunday thrill seeker rather than a serious buyer because I told him I wanted a deal for cash. In the end I walked out feeling pretty insulted, but did eventually manage to get a better (but not brilliant) deal from another dealer.

Yesterday I had a test drive with another young sales kid, who was much more open about the situation. He told me that the incentives for them to sell the finance are so massive that there just isn't any benefit to them in cash sales. At the end of the day, I can't blame the salesmen for the framework that they are given to work in, although I do think there will come a time when these young kids have to try to sell cars without finance and won't have the foggiest idea how to do it.

For now, whilst it drives me insane that me and my cash are treated like dog muck, I console myself that all these "better" customers jumping into every credit agreement they can find will at some point find themselves so debt soaked that they can't afford another house, car or holiday for years to come. It doesn't matter if interest rates don't rise, eventually the small monthly payments add up to a financial straightjacket. I've been there.

And then cash will once again be king.

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Yesterday I had a test drive with another young sales kid, who was much more open about the situation. He told me that the incentives for them to sell the finance are so massive that there just isn't any benefit to them in cash sales. At the end of the day, I can't blame the salesmen for the framework that they are given to work in, although I do think there will come a time when these young kids have to try to sell cars without finance and won't have the foggiest idea how to do it.

I have said the below before on another similar themed thread, the whole dealership network and the car companies themselves have tied themselves to this financialized model.

The next time this model collapses, when those same companies and all their employees come whining, bitching and panhandling for financial support / scrappage or any other ******** support scheme from the government taxpayer they should all roundly be told to go swivel and sort out their own business models and they way they finance them and the sales they rely on.

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I went to a main Nissan dealer to buy a car about 2 years ago and they literally would not even give 1p off list price unless I went on finance (7%)

They literally seemed incapable of understanding I didn't want to take out finance at 7% when I had the cash in the bank earning naff all.

So I went to one of those dutch auction websites where dealers compete for your business and got offers of £4/5k off list price from dealers all over the country.

Eventually I bought a 5 year old BMW instead from a local dealers who gave me a much better deal overall.

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When I bought a new car, last year, the manufacturers were offering special discounts and terms linked to finance which were so good that it made sense to take the finance and pay it off in cash after a month.

Good idea. I always assumed that there would be some harsh financial penalty if you settled up early. And the salesperson still gets his or her commission!

I bought a new Fiat a few years ago. Paid cash but the salesman still insisted on talking me through the Key Facts document. Which of course had £0 on credit, 0%, £0 total repayment printed on it. Despite my protestations, he said he had to explain it to me as it was "the law".

I remember having to do this too, despite paying the balance on my debit card.

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You need to wait till the end of the quarter or buy at auction or buy privately. Last car I bought was last year...brand new...7k off the book price. Credit is king if you are stupid or believe a salesman.

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I am in the process of buying a modest used car and happen to have enough saved not to need to finance the purchase. Once upon a time this might have been viewed as the actions of a wise and frugal man- to actually save money first in order to make a purchase.

Foolishly I imagined my bargaining position regarding the various used car sales persons I have encountered would have been strengthened by my ability to put real money on the table- but I was mistaken.

These guys do not really want my cash- what they want is for me to take out credit- why? Because for every credit agreement they sign a customer up to they are rewarded with a bonus.

So in the brave new world of modern economics it is the ability and willingness to take on debt that is rewarded- not the ability and willingness to save money in order to make the purchase with actual cash.

So it is I who is the pariah- my indecency in not seeking to indebt myself is looked upon with something akin to disgust. What is wrong with this person who does not seek to indebt himself?

In short in seeking to fund my purchase with actual earned money instead of wealth borrowed from the future I am not entirely normal. I am an aberration- a deviant of suspect character.

In my naïveté I had imagined that the people who sell cars would derive their profits from the selling of cars- yes I know, ridiculous right? In reality-of course- they derive their profits mainly not from the selling of cars but from the selling of debt.

So debt- once the humble facilitator of commerce has now become the end product- the goods on display in the showrooms are mere intermediaries, the necessary soil in which the seeds of debt will be planted- then comes the Harvest.

Perhaps I am making too much of this but it seems to me that somewhere along the line we crossed a line, we reached a tipping point in which finance ceased to be the servant of the economy, and became it's master.

We live in the world the bankers made- and they are truly the masters of our universe- because they control the most valuable and vital resource on the planet- not oil nor food but debt- without debt and it's perpetual and miraculous recreation we would all starve- not for lack of food but for lack of the means to organize it's production and distribution.

It's not money that makes our world go round- it's debt. Ask any used car salesman who his most valued customers are- and he will tell you; those who take on the most debt.

I can't help feeling that this will not end well.

you make eminent sense my friend...

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