You are here:

Used Cars/Used car negotiation


I have seen it hinted on this site that you may be able to negotiate a lower purchase price on a used vehicle if you finance through the dealership.  The theory being that they make money through the finance process.  My plan would be to negotiate a purchase price and finance through dealer. All the while with enough cash to pay for the vehicle in full.  Then when the first payment is due I pay off the loan entirely.  Of course this would have to be for a simple interest loan.  Would any potential savings be enough to justify this strategy?

Hello CJ, thanks for your question.  What you are asking is true to some extant. The dealers do get paid a small amount for the loans they write but not much.  Most banks pay %1 of the amount financed to the dealer for their effort in doing the paperwork required. Why the dealers offer to arrange financing isn't for the %1 its so they have the chance to sell you extras like warranties and life or disability insurance. They really don't make much on the financing plus if you paid it off on the first payment they would be required to give back the 1%.  In my opinion it wouldn't be worth your time since they probably wouldn't give you much of a discount for financing anyway.  If you can just pay cash and enjoy your new car.  
Thanks again and good luck!  Shane  

Used Cars

All Answers

Answers by Expert:

Ask Experts




Understanding how your credit report is used when purchasing a vehicle. Understanding the "Simple Interest Contract". When to put money down and why. I can give you some basic questions to ask the dealer befor signing your papers. I can answer about any question you have about buying a used car from a dealer. I am in Michigan and laws do vary from state to state. I will always try to help with any question regarding used cars.


I have been a Sales Manager as well as doing Finance for dealers for 19 years, Sub Prime or Special Finance as it is referred to in the buisness. I also have sold cars at Chevy and Ford dealerships for the last 16 years

General Store Manager since 2009 and 19 total years of on the job experience.

©2017 All rights reserved.