Do car dealers prefer cash or finance?

Car dealers generally prefer financing because they earn significant profits from commissions on loans (dealer reserve) and selling extras like warranties, which get bundled into monthly payments, making the total revenue much higher than a simple cash sale. While they'll take cash, they lose out on these backend profits, potentially leading them to offer less discount upfront or push harder for financing, though some may offer cash discounts to move inventory.

Do car salesmen prefer cash or finance?

Dealership salespeople don't always like the word “cash.” For a dealership, a cash sale could mean a lost opportunity to receive commissions on car loans or extras, such as accessories and an extended warranty.

What is the red flag rule for car dealers?

The Red Flags Rule for auto dealerships requires them to have a written Identity Theft Prevention Program (ITPP) to detect, prevent, and mitigate identity theft in credit/lease applications, focusing on warning signs like mismatched PII, forged documents, or unusual credit patterns. Dealerships must identify accounts at risk, spot relevant "red flags," implement procedures for detection and response, and regularly update their programs, ensuring senior management oversight and employee training to avoid hefty fines and protect customers. 

Is it better to pay in cash or finance a car?

Paying cash avoids interest and debt, offering financial freedom, but financing can build credit and keep your savings liquid, especially with low rates or dealer incentives, making the best choice depend on your financial situation, goals, and the specific loan terms. Generally, if you can avoid draining your emergency fund, cash is safer, but if interest rates are very low (like 0%) and you can earn more by investing your cash, or if you need to build credit, financing might be better, says U.S. News and myFICO. 

Why not tell a car salesman you are paying cash?

You shouldn't tell a car salesman you're paying cash upfront because dealerships make significant profits from financing (back-end profits) through loan markups, commissions, and selling extras like warranties; a cash buyer cuts off these lucrative revenue streams, prompting salespeople to potentially quote higher prices, negotiate less, or add hidden fees, as they lose potential bonus income, so it's best to negotiate the best price first, then reveal your cash payment in the finance office. 

Paying CASH for a Car vs Financing - Pros & Cons - Which is better for you?

Will a dealership give you a better deal if you pay cash?

No, paying cash often doesn't get you a better deal; in fact, it can hinder negotiations because dealerships profit from financing, meaning they might prefer you finance and then pay off the loan quickly, or take advantage of special manufacturer financing deals, making you better off negotiating the price first, then arranging your own financing to pay off immediately if you have the cash. 

What is a red flag in a dealership?

Car dealership red flags include high-pressure tactics, hidden fees (like "market adjustments"), refusal to provide the total "out-the-door" (OTD) price, focusing only on monthly payments, lack of vehicle history reports, adding mandatory unwanted accessories (payment packing), and asking for personal finance info before a test drive; these tactics often hide inflated prices or unfavorable terms, so always demand transparency and get everything in writing before signing. 

Is it a red flag to pay cash for a car?

But when it comes to buying a car, using cash can raise red flags; paper money is harder to trace, easier to counterfeit, and easier to steal than a credit or debit card. That being said, it's still legal tender.

What is Dave Ramsey's rule on cars?

Dave Ramsey's core car rules emphasize paying cash to avoid debt, as cars are depreciating assets that lose value quickly; he advises that the total value of all vehicles shouldn't exceed half your annual income, and generally, you should buy a reliable used car instead of new unless you're a millionaire. The ultimate goal is to own your vehicle outright, preventing payments from derailing your financial plan.
 

What should you never reveal to the dealer when negotiating?

You should never reveal your maximum budget, monthly payment, or trade-in details upfront, as this gives the dealer leverage; focus solely on the car's out-the-door price, and avoid expressing desperation or revealing you're only looking at one specific brand to maintain negotiating power. Keep financial details private and negotiate the total vehicle price first, not monthly installments, to avoid confusion and hidden costs. 

What is the 8% rule when buying a car?

The 8% rule, part of the 20/3/8 car-buying guideline, suggests your total monthly car expenses (payment, insurance, gas, maintenance) should not exceed 8% of your gross monthly income, helping you avoid overspending and keep other financial goals on track by limiting car costs to a small portion of your budget. This guideline also recommends a 20% down payment and financing for no longer than 3 years (36 months) to prevent being "underwater" (owing more than the car's worth). 

How to win against a car salesman?

Car salespeople use various tactics to pressure buyers into purchasing vehicles they may not afford. Staying focused on the total cost of the car, interest rate and fees can help you avoid making a purchase you'll regret. Don't be afraid to walk away if the purchase doesn't feel right.

What is the smartest way to pay for a car?

The best way to pay for a car balances saving money with financial security, often meaning paying mostly cash and financing a small amount to get a better dealer price, or paying all cash for simplicity (using a cashier's check/wire for large sums). For most, leasing offers lower monthly payments but costs more long-term, while financing is best with a short term (under 60 months) and low interest. 

Why Dave Ramsey says not to finance a car?

“Cars, trucks, RVs, boats, and everything that has motors and wheels go down in value,” Ramsey wrote recently. “NEVER finance them, because they go down in value and you get stuck in them. Don't let debt trap you in something that's losing value every day. Save up, pay cash, and own it outright.”

Do dealerships make more money if you finance through them?

Yes, Dealers Make Money on Financing

Dealerships 'buy' financing at one rate and 'sell' it to customers at another and keep the difference. This can add up to thousands of dollars over the life of a loan.

What is a good APR for a 72-month car loan?

A good 72-month car interest rate depends on your credit, but generally, under 5% is excellent, 5-7% is good, and anything over 8-9% starts getting high, though averages hover around 4.5% to 7% for well-qualified buyers in early 2026, with lower rates for new cars and excellent credit. Rates for top credit scores can dip below 3%, while average rates for all credit levels are higher, especially for used cars. 

What credit score is needed for a $40,000 car?

There's no minimum credit score required to get an auto loan. However, a credit score of 661 or above—considered a prime VantageScore® credit score—will generally improve your chances of getting approved with favorable terms. For the FICO® Score Θ , a good credit score is 670 or higher.

Is it better to buy new or used with a loan?

It may be easier to secure a loan for a new car than it is for a used car, and new car loans often come with lower interest rates. Used cars can be a good fit if you're on a budget and they generally cost less to insure; however, interest rates for used car loans are often higher than for new car loans.

Why don't dealers want you to pay cash?

Why do dealerships not want you to pay cash? Dealerships don't want you to pay cash because they don't earn a commission on arranging financing. If you qualify for in-house financing, the profits they miss out on increase since they don't have to work with a third-party lender.

What is a red flag in a car dealership used for?

Used car dealership red flags include high-pressure tactics, refusing vehicle history reports or test drives, hidden fees (like "dealer prep"), lack of transparency about the car's past (new paint, bad smells, warning lights), focusing only on monthly payments, and poor online reviews; always check for a clean title, get an independent inspection, and ensure all costs are clear before signing anything.
 

Why shouldn't you tell a car dealer that you're paying in cash?

You shouldn't tell a car salesman you're paying cash upfront because dealerships make significant profits from financing (back-end profits) through loan markups, commissions, and selling extras like warranties; a cash buyer cuts off these lucrative revenue streams, prompting salespeople to potentially quote higher prices, negotiate less, or add hidden fees, as they lose potential bonus income, so it's best to negotiate the best price first, then reveal your cash payment in the finance office. 

How to be taken seriously at a car dealership?

How to Be Taken Seriously at a Dealership and Negotiate a Great Deal

1. Determine Your Dealership. The first thing you want to consider is the actual dealership and salesperson you want to work with. ...
2. Figure Out Your Budget. ...
3. Learn about Your Dream Car. ...
4. Find the Right Time. ...
5. Get Pre-Qualified.

When you walk out of a dealership, will they call back?

So to answer your question, if you have a decent salesperson OR if it's dealer policy , they'll 100% call you anyway. I've almost never called to say "Hey the deal got better!!!" Because if I let you walk that's the lowest I'm going.

What does 🚩 mean from a girl?

When a girl uses the 🚩 (red flag) emoji, she's signaling a warning sign or a dealbreaker in dating/relationships, pointing out a behavior, trait, or statement from someone that suggests they might be toxic, problematic, or just not a good fit, like controlling behavior, disrespect, or dishonesty, often used humorously to highlight ridiculous traits or seriously to indicate a need to stop.