What Is Consumer Cash When Buying A Car
If they pick cash back, consumers have yet another choice to make: how to receive the money. They can get the money via a check from the manufacturer or they can factor it into the down payment. Most go with the latter. The money is immediately deducted from the down payment, lowering the amount a buyer owes on a vehicle.
what is consumer cash when buying a car
Consumers need to remember that cash back is offered by the manufacturer, not the dealership. Because of that, consumers should try to cut down the price as much as possible. Dealers still have wiggle room with pricing, and consumers should take advantage of it.
Buying a new or used vehicle is a major purchase, and it can be a complicated process, but by following some guidelines and doing the right research before the sale, consumers can minimize or eliminate common buying errors.
If a car you buy turns out to be faulty, your rights and options largely depend on who you bought it from and how they described the car. You have less legal protection when buying from a private seller or from a car auction than when buying from a dealer.
Thinking back to my years in the retail auto industry, I ran across a lot of people who wanted to throw around the fact that they were paying cash, and were determined that they should get some sort of special deal because of that. The truth was, as a car dealer, I didn't really care how we received our money. Whether cash, credit union, bank, or one of our finance sources, we got our money quickly, often the same day, so waving a blank check in front of me did not carry any weight when it came to pricing my vehicle.
The Car Allowance Rebate System (CARS), colloquially known as "cash for clunkers", was a $3 billion U.S. federal scrappage program intended to provide economic incentives to U.S. residents to purchase a new, more fuel-efficient vehicle when trading in a less fuel-efficient vehicle. The program was promoted as a post-recession stimulus program to boost auto sales while putting more fuel-efficient vehicles on the roadways.
The House approved the creation of a cash-for-clunkers program with the 298 to 119 passage of the CARS Act ("Consumer Assistance to Recycle and Save Act", H.R. 1550). The House bill, sponsored by Rep. Betty Sutton (D-Ohio), allowed consumers to trade-in vehicles with a combined fuel economy of 18 or less for new, more efficient vehicles. In the Senate, Debbie Stabenow (D-Michigan), and Sam Brownback (R-Kansas) sponsored a bill very similar to the House's.
To ensure that vehicles traded-in under "cash for clunkers" will not be resold by dealers, the program outlines a procedure for destructively disabling the engine (and thus also precluding the possibility that any mechanical engine components might be salvaged to be used in the repair of any other vehicles): the motor oil is drained and replaced with a sodium silicate solution, then the engine is started and run until the solution, becoming glass-like when heated, causes engine internal bearings to abrade and ultimately seize. In addition, the salvage or scrap facility which acquires the vehicle cannot sell the engine, cylinder heads or a "rolling chassis" from the scrap vehicle. The salvage or scrap facility can sell any other component (including the transmission and axles) from the scrap vehicle separately and may dismantle and warehouse the parts. The "hull" of the vehicle must be crushed within 180 days. Cut off or unbolted front-end assemblies may be saved and sold at a later date, as well as the "top and back" of pickup cabs.
Economists call this sort of pricing strategy "price discrimination." That's when, instead of charging everyone the same price, sellers charge people different prices based on their willingness to pay. In simpler terms, it means that the seller milks as much money as they can out of you. Not all dealerships engage in this pricing strategy, but many do it aggressively, often with snake oil-style salesmanship, deceptive marketing tactics, hidden fees, and overpriced add-ons, like floor mats, alarm systems, or anti-rust undercoating. Some consumers call the outfits that employ these tactics "stealerships."
Dealerships are usually independent franchises of their affiliated automaker, which means they are autonomous businesses that can basically do what they want when it comes to setting prices. But many automakers are not happy with their franchises charging crazy high markups. A recent study from the consumer group Growth for Knowledge suggests that excessive price gouging sours consumers on not just a particular dealership, but the car brand as a whole.
The new rules the FTC proposes include a ban on deceptive advertising in which dealerships market cars as way cheaper than they actually intend to sell them for; a ban on "junk fees for fraudulent add-on products and services that provide no benefit to the consumer"; and a requirement that dealerships disclose upfront all costs and conditions for buying their vehicles.
For years we have received questions from car buyers asking us why the car dealer wants them to fill out a credit application when they are paying for their car with cash or a cashier's check. The customer wants to know why the dealer's suspicious action is requiring them to fill out a credit application because after all you are paying cash and not applying for new car financing or any type of loan.
We used to say cash is king when buying a new car, but sometimes it does add complications. In this car buying scenario, you are out car shopping and decide you want to avoid financing your new car purchase, and instead you want to pay with cash or a cashier's check, or even a personal check because after all, cash is king.
By the way, car salespeople and dealership finance managers hate it when you pay cash because it robs them of the additional profit of selling car financing, and for dishonest salespeople it removes all the shells in their cash flow shell games. Now they cannot pack your non existing car payments with needless extras.
All they need is a name, not a number. As we showed you above, if you are paying cash and the car dealer checks your name against the OFAC list, you can easily see they don't need your Social Security number, so this is why I say it's bogus when they force you to fill out a credit application when you pay cash.
Other unscrupulous dealers lie and say the "Patriot Act requires you to fill out a credit application", which is just a flat out lie. Also the OFAC requirements were in place years before the Patriot Act. Ever since the early 2000's we here at CarBuyingTips.com have received complaints from car buyers telling us the dealer told them it is required by the Patriot Act when they pay cash.
In the photo above you can clearly see that IRS is telling us that "A cashier's check, bank draft, traveler's check, or money order with a face amount of more than $10,000 is not treated as cash. These items are not defined as cash and you do not have to file Form 8300 when you receive them because, if they were bought with currency, the bank or other financial institution that issued them must file a report on FinCEN Report 112."
About The Author: Jeff Ostroff A lifelong consumer advocate with over 20 years of unparalleled expertise, Jeff is the Founder, CEO and Editor-In-Chief of CarBuyingTips.com. As chief consumer advocate, he oversees a team of experts who cover all aspects of buying and selling new and used cars including leasing and financing.
This latest offering addresses two of the most prevalent automotive retail trends currently facing the marketplace. First, consumer interest in completing more elements of buying and selling cars online versus in-person has accelerated rapidly. Second, dealerships are hungry to find new and efficient ways to acquire vehicles amid the current industry shortages.
The title to a motor vehicle is the proof of who owns the vehicle. In New Hampshire, as in all states, motor vehicle titles are registered with the state. There are certain procedures that must be followed when registering a motor vehicle the first time, when buying a used vehicle, and when removing a lienholder from the title. Laws governing auto titles vary from state to state. This section deals with the laws that apply to auto titles in New Hampshire.
It is important to know, however, that some cash allowance offers sometimes mask scams designed to trick buyers into choosing cars the dealership is desperate to move. Beware of dealers who promise to mail cash allowance checks rather than reduce the price on the spot. You should also be on the lookout for dealers who jack up the price of a car a certain amount, then offer that same amount as the cash allowance. You end up paying the full amount, even though the dealer makes it look like you're getting a deal. You can protect yourself by checking the "sale" price against price estimates published by major car publishers like Edmunds.com or Kelley Blue Book. You can also do a Web search on particular dealers to see if they have been linked to fraudulent activity. Or contact consumer organizations like the Better Business Bureau to see if any complaints have been lodged against the dealer.
To help answer such questions, we are continuing to regularly survey consumers in the United States, the United Kingdom, Germany, France, Italy, Japan, and China on their mobility behaviors and plans around car buying and servicing. Our survey looks at both current consumer sentiment and anticipated future behavior as economies find the next normal.
The first step to buying a car from a private seller involves researching vehicles that fit your needs and lifestyle. You should determine how much you can afford to spend on a car and set a budget. This is also the time to reach out to potential lenders. Private sellers typically don't offer financing, so you may need to take out a loan unless you have enough cash to pay for the car upfront. Either way, it's better to know how you're going to pay for the vehicle before you've locked in on the one you want. 041b061a72