Buying in ‘cash’ and negotiating the price....
Discussion
Hello all,
Due to an unfortunate theft and an insurance payout I’m back in the market for approved used Mercedes. Roughly speaking should I be able to get some money off the list price? I ask as whilst I’ve bought loads of cars over years I’ve always had a part exchange as part of the negotiation and you never really know where you are in the grand scheme of things. I would have thought a ‘cash’ buyer should be able to save 5-10% if you negotiated well.......
Due to an unfortunate theft and an insurance payout I’m back in the market for approved used Mercedes. Roughly speaking should I be able to get some money off the list price? I ask as whilst I’ve bought loads of cars over years I’ve always had a part exchange as part of the negotiation and you never really know where you are in the grand scheme of things. I would have thought a ‘cash’ buyer should be able to save 5-10% if you negotiated well.......
Most main dealers profit margin will be circa 10-15% depending what what needs to be done/has been done etc. So i wouldn't expect to be getting a huge amount off on a straight cash purchase. Equally without the use of finance from them or a PX they can't recoop the money on the back end.
I think you need to sit down and ask yourself why cash should entitle you to a discount instead of using dealer finance which would have made them more money.
There aren't massive margins in cars, the market is incredibly competitive, so I think you should count yourself lucky if you manage to get any discount at all when you are paying via the least profitable payment method.
Edit: The above comment regarding the size of the margin in a new car is utter rubbish! I spent 3 years selling cars (fortunately I escaped 18 months ago) and there is no-one selling you a used Mercedes with 15% margin in the chassis.
There aren't massive margins in cars, the market is incredibly competitive, so I think you should count yourself lucky if you manage to get any discount at all when you are paying via the least profitable payment method.
Edit: The above comment regarding the size of the margin in a new car is utter rubbish! I spent 3 years selling cars (fortunately I escaped 18 months ago) and there is no-one selling you a used Mercedes with 15% margin in the chassis.
Edited by TXG399 on Monday 22 October 13:20
Whilst I am not in the motor trade, I do sell boats and yachts. People do ask if they can pay in cash and I normally decline as I still have to declare the sale from a VAT point of view (only applicable to new boats), I really don't want the hassle and charges of banking large sums of cash and then there is the whole anti money laundering issue which can come into effect. So while cash is useful, on a large purchase, it can be more of a hindrance.
Have had a good sit down - thanks. I have little to no knowledge of dealer margins, have never worked in the trade, but it makes sense that the margin is really I the finance. I guess I’ve always been told by dealers that they take risks on part exchanges ie that they don’t get what they expect at auction so just wondered if taking that risk away might save me a couple of quid. Seems to me that pretty much all business now works on smaller margins.
robinh73 said:
Whilst I am not in the motor trade, I do sell boats and yachts. People do ask if they can pay in cash and I normally decline as I still have to declare the sale from a VAT point of view (only applicable to new boats), I really don't want the hassle and charges of banking large sums of cash and then there is the whole anti money laundering issue which can come into effect. So while cash is useful, on a large purchase, it can be more of a hindrance.
He didn't mean 'cash' literally.TXG399 said:
Edit: The above comment regarding the size of the margin in a new car is utter rubbish! I spent 3 years selling cars (fortunately I escaped 18 months ago) and there is no-one selling you a used Mercedes with 15% margin in the chassis.
Yet I managed to get a £26,995 used Mercedes for £23,500 ('cash'). And even then I'm not sure I didn't leave money on the table.Sheepshanks said:
robinh73 said:
Whilst I am not in the motor trade, I do sell boats and yachts. People do ask if they can pay in cash and I normally decline as I still have to declare the sale from a VAT point of view (only applicable to new boats), I really don't want the hassle and charges of banking large sums of cash and then there is the whole anti money laundering issue which can come into effect. So while cash is useful, on a large purchase, it can be more of a hindrance.
He didn't mean 'cash' literally.TheAlastair34 said:
Might be cheaper deal on finance, if so take it on finance and settle the finance after a week or so
The last new car I bought (wife's VW Tiguan) I did that. I've always bought cash before but there was a £2750 deposit contribution available. Got more than another 3 grand off as well. Vs buying 'cash' it was by far the best buying experience I've had - I reckon the salesman would have turned himself inside out if I'd asked him.So may be worth trying that route - just get the amount being financed as low as possible. The interest rate doesn't matter as you aren't paying any.
TeamBigfoot said:
This is how a friend bought a 520d Msport, the actual deal worked out cheaper than "cash" because of the dealer kickback from the finance company.
I've done this twice now, a quick and easy way of saving a lot of £££The last time though, the sales guy phoned me back to complain. He wasn't very happy !
TheAlastair34 said:
Might be cheaper deal on finance, if so take it on finance and settle the finance after a week or so
This is definitely the best way to get the biggest discount.Just don't tell them in the dealership that this is what you are planning todo or they may refuse to offer finance or alternatively if it becomes known after the fact that the Sales Exec knew it would be paid off it can cause them a lot of grief. You don't need to check that it can be paid off early, it can be and all the details about how to do that is in the paperwork.
I think you have to approach with an open mind
Use the 'cash' if it gets you the best deal, but don't go in there with that as the only payment option you will consider
Make sure the dealer has recognised that you are committed to doing a deal on the right terms and not just kicking tyres
Use the 'cash' if it gets you the best deal, but don't go in there with that as the only payment option you will consider
Make sure the dealer has recognised that you are committed to doing a deal on the right terms and not just kicking tyres
Sheepshanks said:
The last new car I bought (wife's VW Tiguan) I did that. I've always bought cash before but there was a £2750 deposit contribution available. Got more than another 3 grand off as well. Vs buying 'cash' it was by far the best buying experience I've had - I reckon the salesman would have turned himself inside out if I'd asked him.
So may be worth trying that route - just get the amount being financed as low as possible. The interest rate doesn't matter as you aren't paying any.
This is the route I'd go down, but approach both options the salesperson will normally push you towards the finance as it's better for them & they're more likely to give you extras (servicing Alloy insurance etc) so it makes more sense.So may be worth trying that route - just get the amount being financed as low as possible. The interest rate doesn't matter as you aren't paying any.
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