Cash for clunkers will get many people even more indebted

[asiaprop]

incentives:

a) cash is an interest earning asset. Cash can be immediately put to work.

a2) Time: It virtually took me 25 minutes, including ALL paperwork, temp plates, photocopies, from the time I entered the lot to when I left with a new car. The sales guy can be lucky if the credit approval process takes less than 1-2 hours.

b) Much more important: Customers paying cash are much more determined. They know once the green is handed over its gone. When they walk into a dealership with cash in the pocket they know what they want. Dealers know that as well. 1000 things can go wrong in the credit approval process and this could result in a no sale for the dealer. So, its a real risk for the dealer as well as a psychological issue that causes dealers to favor cash over credit. Again this is from the perspective of the guy who gets paid for selling cars not for nailing credit on customers (I am aware Detroit knew about the benefits of cross selling and tried to push sales people to promote credit but in the end its still the number of cars the guy sold that determines his salary, fame, and competitive market value. When interviewing with another dealership nobody asks him how much he squeezed out of customers but how many cars he sold each month and quarter).

c) Last question re your cynical remarks: In connection with new cars, how much better can you do than invoice price? Now everyone knows or should know that the dealerships get the cars at even lower than invoice, factoring in all the kickbacks and what have you. But from the purchaser's perspective I believe this is as good as it gets.

Quote from Maverickz:

Three things:

First IF what you say is true and cash is better to a dealer than someone wanting credit FROM the dealer, then someone walking in with cash they got via loan from their personal credit union would be the same right? The dealer gets his cash either way.

Second, as others have pointed these days MOST dealerships (even Crazy Larry's Used Cars) ARE in bed with some finance "company" (might be Loan Shark Louie but that's not the point). This means they WANT you to get financing through them. Why? Because they can make a couple of K selling to a cash buyer sure BUT they can make that same couple of K off of a financed sale PLUS years of interest on the loan. Also if they can keep people indebted to them for 3-5 years and constantly roll more people onto payment plans as others roll of it, it makes income planning MUCH easier for them and evens out the bad months with the good....kind of like "flex pay" programs that electric companies are now offering.

Third, as I have already said, IF the dealer does NOT have a financing arm to get the residual interest from, then to them a loan is SAME AS CASH. Why? Because as soon as the loan goes through THEY GET THE FULL AMOUNT IN CASH.

So really where is the cash incentive for a dealer? Don't get me wrong if you think you got a good deal on your car then the dealer DID HIS JOB RIGHT! LOL.

 

[Maverickz]

Quote from asiaprop:

incentives:

a) cash is an interest earning asset. Cash can be immediately put to work.

a2) Time: It virtually took me 25 minutes, including ALL paperwork, temp plates, photocopies, from the time I entered the lot to when I left with a new car. The sales guy can be lucky if the credit approval process takes less than 1-2 hours.

You are right cash is that.

So are you suggesting a salesman is going to pass up a 2 hour credit customer in hopes of getting a RARE cash customer next? No they won't.

Quote from asiaprop:

b).... Again this is from the perspective of the guy who gets paid for selling cars not for nailing credit on customers but in the end its still the number of cars the guy sold that determines his salary, fame, and competitive market value. When interviewing with another dealership nobody asks him how much he squeezed out of customers but how many cars he sold each month and quarter).

EXACTLY I couldn't have made a better argument as to why they will give the same discounts to a credit customer as a cash customer myself! The salesman just wants to complete a sale by any means necessary to get HIS paycheck. He's not going to try to screw the credit customer on the numbers (that's the finance guys job) and end up losing the sale. He only cares about HIS paycheck.

Quote from asiaprop:

c) Last question re your cynical remarks: In connection with new cars, how much better can you do than invoice price? Now everyone knows or should know that the dealerships get the cars at even lower than invoice, factoring in all the kickbacks and what have you. But from the purchaser's perspective I believe this is as good as it gets.

So you are saying that cash or credit either way invoice is as low as you can get them right? I agree...this IS the best BOTH cash and credit customer can do. Well except when they do "employee pricing" which is still a scam. Which side are you arguing for again?

EDIT: The salesman's JOB is to sell you a car and make you THINK you got a good deal. If that means they let you think you paid less than the next guy because you paid cash so be it...doesn't make it so.

 

[asiaprop]

dont turn the whole argument upside down by mixing it up with your own points (they dont mix well as we had opposing views and arguments)

1) yes, on a busy Saturday, it makes a huge difference for a top sales man whether he sells the car in 30 minutes or 2.5 hours.

2) A salesman CANNOT give the same discount to a buyer on credit with a credit score lower than perfect. The gross discount may be the same but the net discount (interest factored in) will not be. So while a sales man has to hackle out all the details and negotiatons between the customer, the finance guy, the bolting bank or credit union, he could have sold 3 other cars on the lot to cash payers who hand over the cash and leave soon after. This increases his turnover not sitting with some sweaty schmuck with holes in the pocket in some hot corner office to get his bank approve the loan/lease.

3) So you agree you were a little mislead by cynicism, because I believe you would have a hard time getting a new car below invoice (by normal means, no dealer connections). So, I am not sure what you issue is to make everyone else believe they did not get an ok deal by paying invoice. You must have some magical connections to purchase your cars at manufacturing cost.

Quote from Maverickz:

You are right cash is that.

So are you suggesting a salesman is going to pass up a 2 hour credit customer in hopes of getting a RARE cash customer next? No they won't.




EXACTLY I couldn't have made a better argument as to why they will give the same discounts to a credit customer as a cash customer myself! The salesman just wants to complete a sale by any means necessary to get HIS paycheck. He's not going to try to screw the credit customer on the numbers (that's the finance guys job) and end up losing the sale. He only cares about HIS paycheck.




So you are saying that cash or credit either way invoice is as low as you can get them right? I agree...this IS the best BOTH cash and credit customer can do. Well except when they do "employee pricing" which is still a scam. Which side are you arguing for again?

 

[Maverickz]

Quote from asiaprop:

dont turn the whole argument upside down by mixing it up with your own points (they dont mix well as we had opposing views and arguments)

1) yes, on a busy Saturday, it makes a huge difference for a top sales man whether he sells the car in 30 minutes or 2.5 hours.

2) A salesman CANNOT give the same discount to a buyer on credit with a credit score lower than perfect. The gross discount may be the same but the net discount (interest factored in) will not be. So while a sales man has to hackle out all the details and negotiatons between the customer, the finance guy, the bolting bank or credit union, he could have sold 3 other cars on the lot to cash payers who hand over the cash and leave soon after. This increases his turnover not sitting with some sweaty schmuck with holes in the pocket in some hot corner office to get his bank approve the loan/lease.

3) So you agree you were a little mislead by cynicism, because I believe you would have a hard time getting a new car below invoice (by normal means, no dealer connections). So, I am not sure what you issue is to make everyone else believe they did not get an ok deal by paying invoice. You must have some magical connections to purchase your cars at manufacturing cost.

You act like cash customers are a dime a dozen so salesmen can pass up credit customers and wait around for a cash customer. Yes if you identify yourself as a cash customer up front you might get better more attentive service but you will not get a lower price than a credit customer. Yes the credit customer will pay more over the life of the loan but that's WHY dealers like credit sales.

As far as if you got a good deal or not I guess beauty is in the eye of the beholder. Dealers have a bottom line amount they will sale a car for and NO ONE, cash or otherwise is talking them below that point. Unfortunately all consumers (regardless of payment method) can do is negotiate as low as possible and HOPE you got as close to that bottom line as possible. Did you get a good deal? If you think you did then maybe you did. I guarantee the dealer is happy with the deal.

The best auto deals are actually buying from individuals when you can get it for below "trade-in" value. That's where the saving is. If you drive a car off a dealer's lot you paid more than the car is worth....PERIOD.

 

[saxon22]

Just use cash and buy it used. 60% off to start with plus another 2K a year less for insurance. Case closed. Buying new is financially stupid, it does massage your ego but ... still stupid.

 

[asiaprop]

sure some of your last points are right but we talked about new car sales at least in this short argument.

Your other replies don't even tangent the points I made so I still stand by my opinion that it is more advantageous for both, the sales man and the customer, to pay cash rather than on credit.

Quote from Maverickz:

You act like cash customers are a dime a dozen so salesmen can pass up credit customers and wait around for a cash customer. Yes if you identify yourself as a cash customer up front you might get better more attentive service but you will not get a lower price than a credit customer. Yes the credit customer will pay more over the life of the loan but that's WHY dealers like credit sales.

As far as if you got a good deal or not I guess beauty is in the eye of the beholder. Dealers have a bottom line amount they will sale a car for and NO ONE, cash or otherwise is talking them below that point. Unfortunately all consumers (regardless of payment method) can do is negotiate as low as possible and HOPE you got as close to that bottom line as possible. Did you get a good deal? If you think you did then maybe you did. I guarantee the dealer is happy with the deal.

The best auto deals are actually buying from individuals when you can get it for below "trade-in" value. That's where the saving is. If you drive a car off a dealer's lot you paid more than the car is worth....PERIOD.

 

[asiaprop]

agree with you on that point. Here paying cash gets you even miles farther than negotiating a loan.

Quote from saxon22:

Just use cash and buy it used. 60% off to start with plus another 2K a year less for insurance. Case closed. Buying new is financially stupid, it does massage your ego but ... still stupid.

 

[slapshot]

Quote from drcha:

[B
Actually, yes, I am a millionaire. And I will keep on driving the car I have until it, too, is a clunker. [/B]

If this is true, then you completely miss the point of being a millionaire.

Money has no value unless it can A) prevent human suffering or B) improve one's life and/or the lives of others.

Here's how I see it: why die with a million dollars and drive shitters when you could die with $900k and have enjoyed (for many years) one of the great pleasures of human life, which is a decent newer ride?

You must be one of those miser types, stuck in your greedy fearful little world, Mr. Scrooge.

 

[ByLoSellHi]

I'm pretty wealthy, and get no enjoyment out of paying for rapidly depreciating items like NEW cars.

It brings me pain, in fact.