TYM vs Yanmar

[nyone]

I have to ask about the cash vs financed price difference.

There different. Lots of dealers mark up the financing price vs the cash price then offer low % interest rate..because it's just in the full price now.

 

[Torvy]

There different. Lots of dealers mark up the financing price vs the cash price then offer low % interest rate..because it's just in the full price now.

Typically, if you do the math, you are better off with the low finance rate, even at a higher price.

Place the cash in a low risk broad fund. Easy to net 7% or more after inflation. There could be exceptions, but when I have run the numbers, financing is better if you qualify for truly low rates.

 

[TractorTYMe]

I pull a 6' just fine, I can't imagine a 7' is gonna be hell or high water difference.

 

[California]

There different. Lots of dealers mark up the financing price vs the cash price then offer low % interest rate..because it's just in the full price now.

I've been reading about car financing and saw that dealers often push financing because they get a kickback that allows them to sell for less, if financed.

So for the customer, if you actually can afford cash, its important to see if the contract allows paying off the loan early. That might get you the best price of all.

 

[Torvy]

I've been reading about car financing and saw that dealers often push financing because they get a kickback that allows them to sell for less, if financed.

So for the customer, if you actually can afford cash, its important to see if the contract allows paying off the loan early. That might get you the best price of all.

It's not really a kickback. They get a couple of percent of the interest (usually they have some flex in that).

I spent years on the bank side of auto finance. Happy to answer questions if you have them.

 

[California]

It's not really a kickback. They get a couple of percent of the interest (usually they have some flex in that).

I spent years on the bank side of auto finance. Happy to answer questions if you have them.

Thanks for the comment.

How does the dealer make more overall, by discounting the sale price then getting a fraction of the customer's payments? There's some magic here that's not apparent.

Isn't negotiating cash always going to have lowest overall cost to the customer, assuming you shop several dealers?

(I've always paid cash and ignored the finance guy's pitch).

 

[Torvy]

Thanks for the comment.

How does the dealer make more overall, by discounting the sale price then getting a fraction of the customer's payments? There's some magic here that's not apparent.

Isn't negotiating cash always going to have lowest overall cost to the customer, assuming you shop several dealers?

(I've always paid cash and ignored the finance guy's pitch).

Not really. Imagine you have the cash. Instead of paying cash, you invest the cash. Even basic investments in broad markets net roughly 7% after inflation. Versus a 3% note, paying cash is actually losing you 4%+.

Cash is not always king anymore, especially at franchised dealers. The dealer gets his money immediately (more or less) either way. He gets more if he sells you a loan. Franchises often reward dealers with access to more and/or special inventory if they sell well. Sales isn't simply units, it's the whole package of services, including financing.

As a lender, we put more emphasis on a trade than cash down when pricing a loan. It turns out that people who trade a vehicle are more likely to pay. Analytics drive a lot of the bank decisions on auto loans. Cash down is better than no down, but trade is better.

 

[careyo63]

Not really. Imagine you have the cash. Instead of paying cash, you invest the cash. Even basic investments in broad markets net roughly 7% after inflation. Versus a 3% note, paying cash is actually losing you 4%+.

Cash is not always king anymore, especially at franchised dealers. The dealer gets his money immediately (more or less) either way. He gets more if he sells you a loan. Franchises often reward dealers with access to more and/or special inventory if they sell well. Sales isn't simply units, it's the whole package of services, including financing.

As a lender, we put more emphasis on a trade than cash down when pricing a loan. It turns out that people who trade a vehicle are more likely to pay. Analytics drive a lot of the bank decisions on auto loans. Cash down is better than no down, but trade is better.

Dealer cost is a big factor. It varies. My 01 F250 300$ + shipping @ 3.2% I kept the cash. No Dwn.payment. It's super fast. Father was Dealer Rep. Ford credit Ga.. A plan 148Mph..

 

[California]

Not really. Imagine you have the cash. Instead of paying cash, you invest the cash. Even basic investments in broad markets net roughly 7% after inflation. Versus a 3% note, paying cash is actually losing you 4%+.

Cash is not always king anymore, especially at franchised dealers. The dealer gets his money immediately (more or less) either way. He gets more if he sells you a loan. Franchises often reward dealers with access to more and/or special inventory if they sell well. Sales isn't simply units, it's the whole package of services, including financing.

As a lender, we put more emphasis on a trade than cash down when pricing a loan. It turns out that people who trade a vehicle are more likely to pay. Analytics drive a lot of the bank decisions on auto loans. Cash down is better than no down, but trade is better.

Sounds like the net least expensive way to buy, then, is to negotiate a balance (after trade) to finance, that is low enough that the savings compared to paying cash, exceeds the opportunity cost lost by paying off the loan after a few months. The customer saves and the dealer makes his sales targets. No?

 

[Torvy]

Sounds like the net least expensive way to buy, then, is to negotiate a balance (after trade) to finance, that is low enough that the savings compared to paying cash, exceeds the opportunity cost lost by paying off the loan after a few months. The customer saves and the dealer makes his sales targets. No?

Early pay-off is only an advantage if your interest rate is higher than what you can earn investing. I'm not talking risky investments, broad market funds only.

The balance isn't relevant other than how LTV (loan to value) affects your interest rate. The best thing is to get a zero % deal. I know it's counter-intuitive, but banks offer these to balance their risk portfolios. They make it up by having more money to lend with sub-prime or near-prime loans. If you have great credit, banks will allow higher LTV and don't care about down payments.

With cars, there is not typically a savings to paying cash. Dealers who do that are either in trouble financially or will be. (Again, franchise dealers) Used car lots are another bag altogether.

One reason people with money have money is that they make their money work for them, passively or actively. Leveraging a loan to make money can be an avenue to wealth.