Many people prefer physical cash as it is a feasible way to make payments when purchasing a car at dealerships.
Do Car Dealers Accept Physical Cash? Car dealers can accept physical cash for their vehicles, but they do not prefer it when you have to make large payments. They prefer personal or cashier checks and credit or debit cards as they are reliable means of payment. Moreover, it reduces their profit margin from banks in the form of commission for every customer. In addition, physical cash avoids the leverage of negotiating with the customers, and they have to sell vehicles at low prices. Furthermore, they have to report to the IRS for purchasing more than $10,000 on cash payment.
Moreover, you can get a vehicle at the best price with a single payment method, and it helps you make wise and powerful decisions at the dealerships.
However, it is better to know whether car dealers are interested in cash or not, so check their official websites to get an idea of their desired payment methods.
What type of payment do car dealers accept?
There are many ways to pay when you want to purchase an automobile from a dealership. You can choose card payment, cash, and checks at your convenience.
Personal checks
You can pay for a vehicle at the dealership by giving personal checks as they can accept such payment from their customers.
They accept it as they can turn it into cash quickly without any hassle of paying fees.
It is an old method of paying for something, but it is entirely worth it and is considered the most suitable and easiest way to give money.
It is cheaper than a credit or debit card as they do not have to pay fees and helps get rid of procedures of reporting to the government.
Cashier checks
These checks are slightly different from personal checks but offer more security. However, you have to buy a separate check from the bank cashier and ask them to fill it out.
Receiving this type of check requires a reasonable fee of around $10 to $20. The amount can increase or decrease with the total amount you want to transfer.
In addition, it is a reliable and safe method of paying for a vehicle as it confirms funds from a bank.
It offers a guarantee from the bank and reduces the risk of bounce back which commonly occurs with personal checks.
Debit cards
The banks usually impose a limit on spending money in a day which is decided according to their own rules. You can ask the bank’s agents at customer service about the limit on your card.
You can pay for a vehicle using a debit card, but the most common problem encountered while using debit cards is the transaction limit.
So, it is better to inform the bank about the possible transaction for a vehicle so they do not bounce it back and make you feel embarrassed.
Usually, such large payments are not possible with debit cards, so you have to find alternate means of paying the remaining amount.
Credit cards
Acceptance of credit cards by dealerships depends on the transaction, as small ones are allowed. However, they do not prefer large amounts from credit cards as they have to pay the heavy amount as fees.
Accordingly, such fees affect their profit margin, which is not acceptable in any business.
One of my friends was willing to pay $40,000 for a vehicle through a credit card, but they suggested that he pay through other methods to get rid of fees.
It is a quick method of paying for something you have purchased, but it can decrease their profit ratio ultimately.
Physical Cash
They do not prefer to accept cash for many reasons, including a lower profit margin. Moreover, keeping a large amount at the stores and even in your pocket is not safe.
However, you can pay them upfront when your debit cards have reached a limit or you have no other option except it.
In addition, they can only accept upfront money when you have to pay a small amount like a down payment for an automobile.
You can pay a service fee of a few thousand dollars at a dealership. In the same way, they readily accept financing repayments of a few hundred dollars.
Why do car dealers not prefer to accept physical cash?
Many reasons account for the lesser interest of car dealers towards physical cash. They do not prefer to accept it because of reliability and profit issues.
Unreliable method of payment
It is considered the most unreliable method of payment as it can create curiosity and suspicion among dealers.
They do not know the source of money, whether it belongs to you or someone else. So, they ask you to make payments in a reliable way like checks and cards.
They do not suggest credit cards due to profit issues, but it is a secure method.
It is suspicious when you have a huge amount of your money. They do not know whether it is your own or robbed from someone.
No bank commission and profits
When you pay through banks, the dealerships get a commission from their partners for every purchase.
You can consider it a mutual relation for benefit between dealerships and banks when you ask for an auto loan to purchase a car.
The banks provide them with a small percentage of profit, like 1% or 2% when the customers apply for an auto loan from those banks.
However, these are a loss for them in terms of no profit or commission from the respective banks. Therefore, they would always suggest you use your bank cards and checks.
No leverage for negotiations
They prefer alternative methods to upfront payments because it reduces negotiating leverage with customers.
Customers can get more profit when they pay directly and leave no leverage for them to ask for more profit.
It can turn into a loss for selling a vehicle at a lower profit, and a credit card can provide them better profit through commission from the partner banks.
Get rid of reporting procedures
Car dealerships have to report to governmental departments like IRS (Internal Revenue Service), which operates in the US, and ask for taxes from the companies.
It is responsible for generating income taxes from individuals and corporate. In addition, they can impose a heavy fine on the dealers when they do not bring all the purchases to their notice.
Mainly, they have to report the purchase of more than $10,000; otherwise, they have to face unwanted consequences.
Therefore, bank checks can protect them from such reporting procedures and make them able to enjoy profits.
Can you buy a car by paying with physical cash?
You can buy a car using physical cash, but you must be conscious of hiding the mode of payment from dealers until you decide to buy an automobile at a special price.
Search for your desired vehicle online or go to the dealerships physically. Look at each model carefully and know about their features.
A careful inspection and comparison of models can help you get a better vehicle at the best price.
When you have decided on a model, negotiate with them and ask them about the lowest possible price. Show some patience while dealing and do not make a decision quickly.
Give them the amount for your desired vehicle to own and all the related accessories. Then, complete the documentation procedures and enjoy a ride in your car.
Should I tell car dealers about a physical cash payment for a car?
The car dealers are probably not interested in cash payments, so it is better to keep it secret when looking for a suitable vehicle. They have a lower profit margin when you pay them upfront.
Financing an automobile benefits the dealership as they can charge you extra dollars by dividing the amount in monthly installments.
You have to pay 8 to 10% of the total amount, the financing company gets 6 to 7% of the original amount, and the rest goes to the owner.
Accordingly, they can get almost 2 to 3% of the profit when you ask for a loan from the partners. Therefore, do not tell them about physical payments and ask them to finalize the price for the car.
This way, you can save money as there is a margin of negotiation and the possibility of lowering the price.
When considering financing a car, they remain flexible in a price adjustment. Therefore, they can quickly lower the total price because there is a better margin for making a profit.
You can tell them about this when you think they have come to the lowest possible price and there is no way to go more.
In addition, tell them that you have changed your mind and are interested in paying upfront for a vehicle.
What do people say about this?
I surveyed 724 people to know about their experience at car dealerships and what payment methods they have chosen to pay for their vehicles.
Out of 724 people, 446 people (62%) said they wanted to pay through physical cash, but the company asked them to use credit cards and checks to make payments.
However, 196 people (27%) said they have paid down payments and service fees of a vehicle in the form of physical cash, and they have accepted it without any issue.
While the remaining 82 people (11%) said they prefer to use personal checks to pay for their vehicles, and the dealerships have accepted their bank checks.
They do not prefer upfront payment and try to convince their customers to use some other reliable means like a credit card.
“I bought a car 6 months ago and made payment using a credit card because the company was not accepting physical cash.”
“I prefer upfront payments for paying monthly installments of car, even I have used cash for its down payment, and dealerships have showed no concerns for it.”
Personal and cashier checks are reliable methods that all dealers can accept happily.
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