Credit better than cash

Car dealers in the US. don't take too kindly to a customer buying using cash. Why?

Because buyers who pay cash, whether they write a check or borrow the money elsewhere and bring it to the showroom, provide car dealers with fewer opportunities to make money on a car deal.
That ranges from the cut they get from arranging a lease or loan, to options like extended warranties or anti rust coating that buyers are more likely to choose if they can fold it into the amount they borrow. In some cases, those extras account for up to 75 percent of a showroom’s profits.

The quantum of customers doing cash deals in the purchase of a car is going. Who & Why is this happening?
  1. One big reason for the recent rise in cash-paying buyers is the introduction of small and less-expensive cars into the American market

  2. Because many consumers purchase small vehicles as second and third cars, and have a car loan for their primary vehicle, a number are choosing instead to pay cash rather than take on another loan

  3. Cash-paying buyers, who tend to be wealthier than typical consumers, are often reaping investment profits. This year, 34.8 percent paid for their cars by selling stock, the most common source of cash, compared with 31.8 percent who took money out of their savings.

  4. Those who plunk down dollar bills often cite a single reason. They just don’t like debt.

  5. Women buyers account for about 42 percent of cash-paying customers.


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