Buying an expensive car with cash
December 21, 2010 10:54 AM   Subscribe

What are the mechanics of buying an expensive new car "with cash"?

I am going to buy a new car that costs about $80,000 plus tax, registration and fees. I want to pay "cash" for the car and I have plenty of money set aside for it, but I don't know what the best way to go about it is. Obviously I'm not going to literally walk in the door with 800 $100 bills in my pocket (my pockets aren't that big). Will a car dealership accept a personal check for that amount? If they want a cashier's check, I'd have to go to the dealership to negotiate the price, get the exact amount needed, and then go to the bank to get the cashier's check. It would be nice to complete the transaction without having to leave the dealership, especially if I'm doing it on a weekend when the bank may be closed.

I posted this anonymously because I don't want to be accused of tooting my horn about how much money I have. The only reason I mention the amount is that I think it's very relevant to the question.
posted by anonymous to Work & Money (35 answers total) 1 user marked this as a favorite
Don't let the dealer know you plan to pay with cash when you negotiate price. If they know you are going to pay cash they won't budge as much on the actual price because they'll know they can't make it up on the financing.

Why not just walk in with the cash in a briefcase? Maybe bring along a bodyguard...
posted by mikepop at 11:02 AM on December 21, 2010 [3 favorites]

Sorry, that was snide. I would just think that, given the size of the transaction and the fact that you're paying in cash, that there are opportunities to get a discount for paying cash and there might be other considerations that it would be worth exploring with an expert.
posted by seventyfour at 11:03 AM on December 21, 2010

We recently did this with a much cheaper, but not inexpensive, car at Carmax. We logged into our bank account and showed them that there was sufficient money in the account. Once they saw that, they took the check. This was standard practice for them.

Then we changed our password the minute we got home.
posted by donpardo at 11:03 AM on December 21, 2010

Some banks will verify funds for a personal check over the phone, and ones that by policy don't do so make exceptions sometimes. For example Citibank claims not to verify funds, but did when I bought my car from a dealership.
posted by a robot made out of meat at 11:05 AM on December 21, 2010

You can use a personal check. Agree on a price then write them a personal check. I haven't had a problem, and it saves you a lot of bother with getting a bank check.

Usually they want a day to 'prep' the car after completing the transaction. I don't know if this is normal with all car transactions or if they are using that day to verify my check or do some check based on my driver's license. Last time I purchased on a Saturday and picked up on a Sunday.

They should also offer to drop the car off at your home.

They more expensive the car the less people care how you pay for it in my experience.
posted by stchang at 11:08 AM on December 21, 2010 [2 favorites]

Also, I suppose that when your credit check comes in and they see that you have attachable assets, concern that you're writing an $80k bad check is reduced if they can verify that the account is good and you are who you claim to be.
posted by a robot made out of meat at 11:09 AM on December 21, 2010

I've purchased two cars with cash (not quite as high a price), and in both cases we negotiated the price and then went to the bank to get a cashier's check. The only way around this is if your dealership accepts credit card or personal checks up to x amount - we ended up having about a $200 difference between the cashier's check and the total in one instance, and I just put it on a credit card. You could try to find out the dealership's policies before you go in and just get a cashier's check for around the price you think you'll pay, then pay the rest via personal check or credit card.
posted by bedhead at 11:10 AM on December 21, 2010 [1 favorite]

A lot of places will be wary of accepting that much in cash as it screams MONEY LAUNDERING ALERT.
posted by dougrayrankin at 11:11 AM on December 21, 2010

Some banks will issue a cashier's check good for up to a certain amount. You can then fill in the actual amount once you've completed negotiations.
posted by charmcityblues at 11:12 AM on December 21, 2010

I second mikepop's not let the salesman know that you intend to pay cash until you have established a price. They will ask you several times how you intend to pay...just say something like 'we can discuss that later'.

My brother made the mistake of telling them he was paying cash, (buying a Nissan Xterra)..
He wound up paying pretty close to sticker price.

(It doesn't help matters that he also said "Yeah, one of the main reasons I want this truck is because of the first aid kit area in the back"....he probably wound up adding a couple grand to his total just because of that statement.)
posted by AltReality at 11:17 AM on December 21, 2010 [1 favorite]

Ditto on not revealing that it will be a cash deal until price is negotiated. Counter-intuitive, but I used to hang out at and several hard-core no-debters agreed in various discussions that have been had.

They will take a personal check. I made a substantial down-payment on a car using a personal check at a new car dealership. It's not like buying something at Best Buy. The vehicle is titled and if the check were to bounce they have ways of finding you.

I don't think you'll find it's as odd an occurence as you might think.

Congratulations, by the way, on having it together well enough to buy a nice car and pay cash.
posted by randomkeystrike at 11:19 AM on December 21, 2010

I just paid cash for my car (although about 5% of the price of yours) and they accepted a personal check. My father was convinced we'd have to get a cashier's check, though, so in your situation, I would get one.
posted by saveyoursanity at 11:20 AM on December 21, 2010

If you're uncertain, a cashier's check is the way to go. It's basically a written guarantee from the bank that your check will clear instantly. You'll probably have to pay a fee of about $10-$20, which I don't think should bother you too terribly much, considering what you're about to spend.

Of course, you do need to know the amount beforehand when you go to the bank, and it may take them some time to authorize a transaction that large. Give them a call. If you've got $80 grand in the bank, the phone reps will bend over backwards to help you out, and will probably even waive the fee.
posted by schmod at 11:36 AM on December 21, 2010

I had cash to pay for my car, but financed it anyway and just paid off the financing company immediately (after making sure there was no penalty for this, of course). This got me the deep discount for financing and got the salesman the extra financing commission. Everybody won (except the finance company, who didn't really lose, either).

But yeah, they'll take a personal check. If it bounces, you've just stolen the car and their insurance will cover it, so it's not like they've lost money.
posted by coolguymichael at 11:45 AM on December 21, 2010 [5 favorites]

Sorry, that last part was an explanation of why they're happy to take a personal check, not a suggestion that your check might bounce!
posted by coolguymichael at 11:46 AM on December 21, 2010

I bought a car 1/4 of your price "with cash" and the dealership would NOT take my personal check. I had to go get a cashier's check. Can you call up the dealership (without giving personal info and whatnot) and ask what form of payment they will accept? I wouldn't count on them taking a personal check.
posted by brainmouse at 11:54 AM on December 21, 2010

Some car dealerships won't take a personal check and require a cashier's check. It's dealer and state-specific. Call up the dealer and ask a general question, without revealing who you are, and ask if they accept personal check. If they do, ask if they have a limit on the check.
posted by watch out for turtles at 11:55 AM on December 21, 2010

My experience was that the dealer gave me a contract that specified that I was to come back to the dealership with a cashier's check within a week for the negotiated agreement, otherwise a "backup contract" would take effect, where the dealer financed the purchase on their terms.
posted by desl at 11:55 AM on December 21, 2010

Congrats on the new car, I hope it gets you many miles and smiles.

If you have a credit card you can use and get some sort of cash back/points benefit for doing so, go for it. Pay it off the day it hits your account online.

nth-ing not letting on that you have cash until the very last minute. Negotiate the hell out of everything, agree on a price and then introduce the cash at last minute. That's what I do for a trade in, also.
posted by jerseygirl at 12:03 PM on December 21, 2010

their insurance will cover it

FWIW, car dealerships tend to be self-insured. They are not likely to be blase about the possibility of theft.
posted by galadriel at 12:14 PM on December 21, 2010

It would be nice to complete the transaction without having to leave the dealership, especially if I'm doing it on a weekend when the bank may be closed.

If I recall correctly last time I bought a new car, it was not expected that you would complete the transaction on the spot. I believe I signed a contract, but then they gave me a checklist of what I needed to bring the next day or whenever I wanted to actually take delivery of the car. This included items like a cashier's check made out for $x and proof of insurance on the new vehicle.
posted by smackfu at 12:27 PM on December 21, 2010

The dealership took a personal check for 1% of your purchase price when I bought my car. Because of title transfer stuff it took three days to pick up the thing, even though I had all the loan stuff ready to go and my insurance coverage was already set up. I have never known anyone who walked up with money and drove away, at least in the last 20 years (Grandpa always paid cash for his trucks, literal cash, and swore by the "don't tell them you aren't getting a loan" thing.)

I would definitely call the bank for a transfer of this size. It's one of their core functions.
posted by SMPA at 12:36 PM on December 21, 2010

Any cash transaction of this size will require that the car dealer fill out a report, specifically because of money laundering. No big deal.
posted by Mom at 1:27 PM on December 21, 2010

Just as an FYI (and because it probably falls under "mechanics" of buying a car with cash), your car dealership will be required to report the cash purchase to the IRS.
posted by greasy_skillet at 1:32 PM on December 21, 2010

(or what Mom said, she knows best...)
posted by greasy_skillet at 1:33 PM on December 21, 2010

The last car I bought new, I negotiated the entire deal over email before I even visited the dealer. I test drove an identical car at a different dealer (one I knew I would not buy from) to decide if it was the right model for me, them set about emailing all the dealers in the area to get the best price. I won't bore you with the details of my buying process, but I am confident I got the best deal I could this way, as I do not have the right personality type to negotiate well in-person. The dealer arranged all the paperwork in advance and I made an appointment to go in and sign everything and pick up the car. That would work fine for getting a cashier's check. I chose to finance, but you could probably just tell them you are financing with someone else.

On a related note to that, if the dealer has any financing offers right now and your credit is good, it might actually be better to finance the car if the rate they can get is lower than the rate your money earns in savings. I'm thinking about 0.9% financing deals etc. If your savings are earning more than 0.9%, then you actually coem out ahead that way, rather than paying it in cash.
posted by Joh at 1:52 PM on December 21, 2010 [1 favorite]

I bought my last two cars with cash (together they added up to slightly more than your one car). In both cases I wrote a personal check and they called and verified it with the bank. In one or both instances the bank asked to speak with me before verifying the check; I was standing right there when they called. I was told the IRS would be notified and may have had to sign a paper to that effect but I had saved the money legitimately and it was no big deal. I did not let them know I was paying cash until late in the negotiating process and got what seemed like reasonably good deals. At no point did they try to tell me there was a backup contract in case the check bounced or any other shenanigans. If they had I would have walked out then and there.
posted by TedW at 2:09 PM on December 21, 2010

Seven years ago I bought a >$43K car (full sticker price; it was the first day the model was available for sale) with checks from two different personal accounts. After business hours, too, so they couldn't call the banks to verify funds. Maybe they had some other way of doing it, but it turned out to be no problem. Except that they wanted me to fill out a credit app anyway ('just for our records'). I refused.
posted by DandyRandy at 2:28 PM on December 21, 2010

Take two trips to the dealership:
-One to select, haggle relentlessly, and confirm the number (leave before they pass you off to the finance guy)
-Second to bring them a cashier's check made out to exactly $1000 less than the price you agreed upon. They will have an exceedingly difficult time passing up the money in hand.

Best of both worlds!
posted by milqman at 2:59 PM on December 21, 2010 [1 favorite]

I bought my car with cash (it costs less than yours, though) almost a year ago -- end of month and end of year is a great time to get a good deal on a car! And yet, I have a car note. Let me explain...

After we haggled over the price (I give the blow-by-blow in this AskMe), they then got around to asking me about how I was going to pay. I don't pay interest, and told them so. They pulled my credit, and then offered me a 0% three-year loan. The reason: The sales staff gets a spiff/kickback/bonus if they get people to take a loan through the dealership. Since the haggling had already brought the price down to what I thought was the lowest it would go, why not?

In a similar fashion, my parents also paid cash for their cars. They would put the whole thing on a credit card, and then pay off the balance of the credit card before the end of the month.

Both of these have a similar principle: If someone will loan you money for free, then you might as well take them up on the offer. You can make money on your money, for at least a little while longer. (As an added bonus, this keeps you from walking in with a briefcase of cash!)

When I was in my early 20s, I wanted to pay for a new car with a check. They let me drive the car off the lot that day, but obviously they would have repossessed the car if the check bounced -- so, no real risk to them.
posted by Houstonian at 5:28 PM on December 21, 2010

I saw bedhead mention it above, but only as an aside...
If you want to pay with a cashier's check, make an estimate of what you think the car will cost, then get a cashier's check for a few thousand below that, so maybe $75,000 in your example. Then bring several dozen hundred dollar bills and/or a personal checkbook to make up the difference.
posted by CathyG at 7:16 PM on December 21, 2010

Negotiate the price w/o discussing method of payment and then write a check. If they don't accept it, buy elsewhere.
posted by bz at 9:17 PM on December 21, 2010

I did this last month by direct bank transfer to the dealer's account. There was a 2-day lapse between agreeing the price and picking up the car, so it wasn't driven home that day. No, didn't let on it was going to be a cash purchase until after the negotiation.
posted by Cuppatea at 5:52 AM on December 22, 2010

I bought a car about half this price with a personal check about six months ago and had no problems. Walked in, negotiated the price and trade-in, let them know it was cash when they started to talk about financing (to stress what everyone else has said, NEVER tell them you're not going to finance until you have to), wrote a personal check, and drove away. The whole thing took about 3 hours. They held the check for three days as a favor so I could get the money transferred from savings into the checking account.

One of my parents bought an 80K vehicle for cash about 4 years ago - all they did ask to see the account balance online before they would complete the transaction.
posted by Mimzy at 4:31 PM on December 22, 2010

I bought my last car for cash and the dealership ran my debit card.
posted by bendy at 3:27 PM on December 23, 2010

« Older "Hey, teen. Let's have a rap session."   |   How to be a doctor on Antarctica? Newer »
This thread is closed to new comments.