I think you're mistaken about how dealerships and car sales are structured, at least in places like the UK and the US. Maybe it's different where you are?
They get a proportion of the sale price, and they get paid a referral fee for you opening a loan, and then on top of that they can offer extras that you probably don't need like fabric protection products.
> Nobody is coming out with less money on a loan purchase vs. cash, except the buyer.
The dealer is paid to get you to get a loan. If they don't get the loan, they get less money. My understanding is that their referral fee is somewhat weak about how much the loan actually has to be, so they just care that you take it.
It's worth it to them to discount the price by less than their loan referral fee, in order to get the loan referral fee.
> And if you had walked out the door they would have run after you to take the cash deal AND given you the discount.
No they'd just have sold to someone willing to pay their price.
There's a car supply shortage... that's the whole point of the article... did you miss that? If you want to buy a new car at the moment and you go in haggling them on a mid to high end spec car they'll just tell you to fuck off and you won't get the car you want.
> they get paid a referral fee for you opening a loan
Which is added in to the finance charges or amount borrowed. Ever wonder why the salesmen always want to negotiate a "payment" amount instead of a purchase price?
> No they'd just have sold to someone willing to pay their price.
And I'd have just gone to another dealer willing to work with me on my terms.
> There's a car supply shortage
True, and that causes higher prices overall. But negotiation strategies for getting the best deal haven't changed.
> Ever wonder why the salesmen always want to negotiate a "payment" amount instead of a purchase price?
Well that's the point - say you want agree a purchase price for the car before you talk about how you'll pay. Do that and get an actual number from them. Then...
Offer to pay the agreed price cash and ask for a discount based on this - you won't get one because there's no benefit to the dealer in taking cash it's just an inconvenience to them.
or...
Offer to take at least a small a loan and ask for a discount based on this - you might get one because the way they are established means there are strong incentives for them to make loans.
In either case you can of course threaten to walk away if the price isn't right, but paying cash isn't going to increase your bargaining power it's going to diminish it - 'not only is this person wanting to pay less but they also want to fuck up my loan referral rate and fee and make me unpopular with my manager'. And at some point I presume you need a car so you can't walk away forever.
The idea that you're an attractive customer if you'll pay cash is a 90s thing.
The lowest total cost you can pay for most new cars* is to put in a sizable down payment, chose a loan with a low-but-non-zero interest rate, then pay the whole thing off as soon as the loan paperwork shows up. This will always get you the highest dealer incentives (i.e. lowest number on the invoice) which get made up by the bank paying for the profitable loan. After that is buying cash, and last place is 0-interest loans (I guess technically last place is interest-bearing loans paid off in installments, but if you can pay cash that's not really a consideration).
There are always offers which are available to cash buyers/real loan buyers, but not 0% financing buyers. The reason for this is simple; 0% financing is a hack to get people to buy more expensive cars, and you'll discover that on the lower margin cars that option mysteriously vanishes.
I just went through this myself and helped two friends out, it's true for Ford, Honda, VW, Audi, and Chevy at least in the US.
* If you happen to be one of the few people who actually wants to buy a high-margin car (usually Halo cars like Corvettes) then sure, get the 0% financing. Just realize that you're being fleeced, although if you're buying a Vette you probably already knew that and value isn't top-of-mind
They get a proportion of the sale price, and they get paid a referral fee for you opening a loan, and then on top of that they can offer extras that you probably don't need like fabric protection products.
> Nobody is coming out with less money on a loan purchase vs. cash, except the buyer.
The dealer is paid to get you to get a loan. If they don't get the loan, they get less money. My understanding is that their referral fee is somewhat weak about how much the loan actually has to be, so they just care that you take it.
It's worth it to them to discount the price by less than their loan referral fee, in order to get the loan referral fee.
> And if you had walked out the door they would have run after you to take the cash deal AND given you the discount.
No they'd just have sold to someone willing to pay their price.
There's a car supply shortage... that's the whole point of the article... did you miss that? If you want to buy a new car at the moment and you go in haggling them on a mid to high end spec car they'll just tell you to fuck off and you won't get the car you want.