Cash purchase and incentives

[WhyNot21]

One question no one has addressed is... does an ordered vehicle qualify as "dealer stock"?

Obviously not.

Edit: But it looks like it's at the dealer's discretion, just like the original question.

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[Sublimecat]

I once had a dealer require me to finance a vehicle to get an incentive. I asked him if there was an early payment penalty. I had to make three payments. After three I could pay it off and there was no penalty. On the third payment the truck expedition was paid off.

 

[JeffWoodall]

My 2 cents is this: Dealerships make money from selling the vehicle obviously, finance points through certain institutions that they deal with, and extended warranties. They also make money by making their quota of vehicles for the month, quarter and year. If you plan on paying cash, don’t tell them until you get the price where you want it. They make more if you finance it so with cash they may not be willing to go down as much since they can’t make it up with the financing and/or extended warranty. Most people are more worried about their payment than a hundred here or there off the total price.
Some incentives and rebates are contingent on you financing, not always.
A general rule is 10% off the MSRP is reasonable and the dealership will still make money. I’d say 15% is even reasonable. They make money hand over fist regardless.
I don’t think there is that much room with the rangers because they are selling them without allowing too much markdown due to the chip shortage and demand. The vehicle, like anything else, is worth what someone will pay.

 

[CollieDog]

There is nothing wrong with being debt free. I took a zero interest loan and 6k off MSRP and paid off the truck in less than a year, did the same with my wife’s car. Dealers asked me to make six payments so their commission wouldn’t unwind.

To each their own, for me personally I like the feeling of actually owning a truck outright, don’t the like the concept of indebtedness.

I am with you on this philosophy. I usually pay for my vehicles outright, and it is nice to have the freedom to sell quickly if needed. I have also done the other way. I bought my wife's CX-5 Carbon Edition, at 62 months 0% interests and there was no payment due for 3 months. I just could not turn down the free money. I financed my new 2021 Ranger with the dealer at the currently obscene rate of 5.9%, just to add, I am old enough to remember when that rate would have been a bargain. Dealer asked me to make 3 consecutive monthly payments for them to get the financing kickback. They cannot require it as there is no early payoff penalties allowed. But they gave me such a great deal on the truck (especially in todays pricing environment). I will pay off with the third payment, as I do not like to be a slave to a debt holder if I can help it. I know the math says to invest that money, but I prefer to live as debt free as possible. Currently only debt is the wife's car and my mortgage (2.49%).

 

[NeptuneRanger]

I am with you on this philosophy. I usually pay for my vehicles outright, and it is nice to have the freedom to sell quickly if needed. I have also done the other way. I bought my wife's CX-5 Carbon Edition, at 62 months 0% interests and there was no payment due for 3 months. I just could not turn down the free money. I financed my new 2021 Ranger with the dealer at the currently obscene rate of 5.9%, just to add, I am old enough to remember when that rate would have been a bargain. Dealer asked me to make 3 consecutive monthly payments for them to get the financing kickback. They cannot require it as there is no early payoff penalties allowed. But they gave me such a great deal on the truck (especially in todays pricing environment). I will pay off with the third payment, as I do not like to be a slave to a debt holder if I can help it. I know the math says to invest that money, but I prefer to live as debt free as possible. Currently only debt is the wife's car and my mortgage (2.49%).

Totally agree, the other part of the argument people who pay over time and ‘invest the difference’ is always left off. Sure they don’t pay a large amount up front, but they sure do on a monthly basis for years so their monthly cash flow for investing is diminished. The net difference factoring in dollar cost averaging in investments isn’t that big a deal, not to mention, stocks have been known (Feb 2020) to go down, leaving our investors without original principle and a big car debt. Again, no judgment here, to each their own, your results may vary.

 

[VAMike]

not to mention, stocks have been known (Feb 2020) to go down, leaving our investors without original principle and a big car debt.

That's when you buy, using capital not tied up in a vehicle.

 

[NeptuneRanger]

That's when you buy, using capital not tied up in a vehicle.

I buy either way, just using funds not spent on car payments. We are both getting to the same place just using different roads,

 

[GregsFX2Ranger]

I bought the end of March and got $3000 manufacturers incentives that I believe were worded for cash sale. I thought it was weird they would give an incentive on a cash sale. I had a loan from my credit union so it counted as a cash sale as far as the dealer was concerned.

Mine were $4000 in April I think. Truck Month 1750 - Customer Cash - 1500 - Select Rebate - 750
(Note- Select Rebate was a aged inventory rebate)
That was the FIRST time I had seen that many rebates on the Ranger.

 

[Buddybiro]

I purchased my truck in November I was eligible for a plan and had no trade in so not allot of incentives. BUT I was trying to get a better deal paying cash. I was told I could have a $1500.00 credit if I financed. Interest rate was 0% ay the time so I took the $1500. And financed it. After the 3rd payment I could pay it off if I didn’t want the payment but it isn’t costing me a dime so I’ll keep my money and make a few bucks as I make payments.

 

[VAMike]

I buy either way, just using funds not spent on car payments. We are both getting to the same place just using different roads,

not exactly the same--I can pay the loan off at any time, but it's a lot harder to get low-interest cash back out of a truck you already own. regardless, people spend money on all kinds of things without any rational reason, and if some people want to get a lower return (effectively, spend money) because it makes them feel better to not have a loan, there's nothing wrong with that. it's just a shame when you see people who think there's something wrong with tools like loans, or that it always saves money to pay cash, rather than understanding that they may be paying a premium to feel better by using cash.

 

[Leftcoast]

not exactly the same--I can pay the loan off at any time, but it's a lot harder to get low-interest cash back out of a truck you already own. regardless, people spend money on all kinds of things without any rational reason, and if some people want to get a lower return (effectively, spend money) because it makes them feel better to not have a loan, there's nothing wrong with that. it's just a shame when you see people who think there's something wrong with tools like loans, or that it always saves money to pay cash, rather than understanding that they may be paying a premium to feel better by using cash.

I haven't had a 100% stock market AA for IIRC never. A paid off vehicle is a return that corresponds to the fixed income portion of your AA. It's the same with a mortgage. Too many people thought they were the arbitrage masters right before the GFC.

 

[jsphlynch]

I bought my truck in April 2019. I could have paid cash instead of getting a loan...but the S&P500 return over the past 2 years has been around 40%. As long as you have the self-discipline to not blow the cash on hookers and booze, it makes no sense to not take a low-interest loan and put the cash to work.

Maybe I'm just overly risk averse, but taking out a loan to play the stock market doesn't sound like a very sound financial strategy.

What happens when the economy tanks, I lose my job, my financed vehicle is upside down, and my stocks lost 40%?

 

[paval3]

When I purchased my XLT about two weeks ago, I got the $2,250 incentive. They asked if I wanted to finance, I said no and went in to pay with cashier's check no problem getting incentive.

 

[WhyNot21]

When I purchased my XLT about two weeks ago, I got the $2,250 incentive. They asked if I wanted to finance, I said no and went in to pay with cashier's check no problem getting incentive.

I think it's just a few dealers that are trying to squeeze whatever they can out of a sale. I'll bet if people told them their walking if they had to use Ford to finance, they would change their tune pretty quick.

 

[VAMike]

What happens when the economy tanks, I lose my job, my financed vehicle is upside down, and my stocks lost 40%?

Nothing, assuming sufficient reserves. Definitely don't play with money you don't have--using various tools to manage cashflow and liquidity is not the same thing as speculating on overleveraged margin. So what can you do if you lose your job and have a car loan? Well, if you have sufficient cash reserves (you must, you were going to pay cash, right?) you simply pay the monthly out of the reserves. In this case you're probably better off having a known monthly payment to budget for plus a pot of money instead of having no payment and no money because you spent all your cash on the car. That gives you time to figure out what to do, instead of needing to panic-sell the car to buy food or whatever.

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