The Truth About Being a “Cash-Buyer”

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Show me the money

The retail motor industry has been around for more than a century now, and some of the ideas we have about it have changed little throughout that time.

It’s in some people’s interests to perpetuate some of the myths surrounding the whole car-buying process, but it would be fair to say that some of those on the retail front-line would like buyers to be at least a little more educated about the process of buying a car than they are at present.

One thing that is a true relic of the past is the notion that being a ‘cash-buyer’ gets you a better deal when you are going to purchase a new vehicle. Here we are going to explain what you need to know to avoid going into a dealership with completely the wrong impression about your situation as a buyer.

What exactly is a ‘cash-buyer’?

A cash buyer can either be a person that is paying for a vehicle outright from a dealership without the need for finance, a buyer that hasn’t got a vehicle to put in as a part-exchange – or both. Those websites that offer to buy your old car from you before you go to a dealership to buy a new one want you to believe that you are a cash-buyer because you don’t have a car to trade-in. As far as a dealer is concerned however, a cash-buyer is someone that isn’t going to take finance from their dealership as part of a deal to buy a vehicle from them.

Will you get a better deal without having a part-exchange to put in?

It may not be what you want to hear, but there is no reason to expect that you will get a better deal on the vehicle you are looking to buy if you don’t have a part-exchange as part of the equation. In fact, depending on what you have to trade-in and what you are looking to buy, having a desirable part-exchange vehicle can actually put you in a better position than if you had disposed of it before shopping for your new one.

When the recession was in full swing for example, new cars weren’t selling as people decided that used cars represented better value in such difficult times. This led to used values actually increasing each month for a considerable time rather than continually falling as we generally expect. At that time, most dealers were more interested in your trade-in than they were in what you were looking to buy. That’s because the wholesale market for used cars was going crazy due to such unprecedented demand, which meant trade-ins were the only realistic way of getting used stock at sensible prices.

How much for cash?

Car sales executives need to be pretty good at times at hiding their emotions. One of the hardest times to hide your true feelings as a car salesperson, is when a customer asks the one question they almost all think puts them in the driving seat for negotiating; “how much for cash?” At that point, it will be extremely difficult for anyone that has been in the industry for more than ten minutes to avoid rolling their eyes on hearing those words.

For a start, if you attempt to pay for a vehicle by using the equivalent of 15,000 euros or more in actual pound notes, the dealer is legally obliged to flag the possibility of potential money laundering to the authorities.

If you are just intending to pay by debit card or bank transfer for the whole amount and you are not taking the dealer’s or manufacturer’s finance, that is a loss of potential finance commission for the dealership. Ask yourself; why would a dealer give you a better deal because you are intending to withhold a way that it can make a profit from them?

What if I get my finance cheaper elsewhere?

You may be able to get finance that appears cheaper from an outside source rather than the selling dealer, but there’s a myriad of things that most people never consider when shopping for finance. If you are looking in a BMW dealership for example, you would almost certainly be able to buy a new car cheaper from a Vauxhall dealership, but it would be a Vauxhall and not a BMW. In the same way, a cheap personal loan carries with it a number of consequences that do not apply to hire purchase, such as the debt being on you rather than being secured on the vehicle, and the lender having no interest in whatever you have used the personal loan for if there is an issue with the car that you cannot get satisfaction for.

There’s also the possibility that the dealer may discount the car by a greater amount if he at least believes that you are going to take their finance, especially if they have a finance target to achieve. It isn’t legal to differentiate between cash and finance customers, but there are also a lot of grounds where you can’t discriminate between job applicants – but it happens.

Why do we believe we can get a deal for cash?

The reason why people believe that paying cash gets you a better deal is because in some areas of commerce it still can. A cash transaction to a tradesman allows that person the possibility of not declaring it for income tax or VAT, even though that is obviously illegal. In the days before money laundering regulations became a part of a dealership’s everyday concerns, it may well have been a similar situation, especially if you were buying from an Arthur Daly type who operates from a portacabin on a gravel pitch. You can no longer pay for something as expensive as a new car in real cash, so there is absolutely no incentive for a dealer to give you a better deal when you ask that question. If anything, it is a true disincentive for the dealer to give you any sort of discount at all.


If you still insist on going into a dealership and telling them right away that you are a cash-buyer, you need realise what it tells them about you. It simply reinforces the knowledge they already have that they are professionals that sell cars to people all day every day, and you are a complete amateur that goes through the process no more than once every few years.

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