When buying a new car, consumers can negotiate large discounts through cash payments. The purchase price can be reduced by up to 20 percent, the ADAC still assumes an average of three to eight percent.
The discount is also attractive for buyers who want to finance the vehicle via a loan. For them, a car loan from the bank is usually cheaper than zero-percent financing from the dealer thanks to the cash rebate.
How high is the cash discount??
The cash discount turns out to be quite high, especially when buying a new car. According to the German Automobile Association (ADAC), discounts are generally eleven percent. According to a study by the automobile club, there is significantly more savings potential when buying a new car over the Internet. In this case, a five-percent discount is possible compared to a purchase at a stationary car dealership. However, the extent to which dealers will accommodate car purchases in terms of price also depends on the vehicle itself. In the case of new cars, the margin is significantly greater than in the case of used cars. In addition, discounts are much more common in the low and medium price segments than on luxury and high-end cars. Particularly for models with low sales, dealers sometimes offer discounts of up to 20 percent if the purchase price is paid in cash.
Advantages for car buyers and car dealers
Of course, car buyers are not entitled to the discount if they pay in cash. However, most dealers are taking at least a small step toward their customers, because cash payment also brings advantages for them. On the one hand, the seller can be sure that the purchase price will actually be paid – unlike with installment payments, for example. On the other hand, the dealer receives liquidity with which he can directly pay his own invoices or purchase new cars.
From the buyer’s point of view, not only the lower purchase price but also the ownership of the car plays a role in cash purchases. If you pay cash right away, you really own the car immediately. If buyers have previously taken out a loan to finance the cash payment, however, they must – at least in the case of a car loan – deposit the vehicle registration document with the bank as collateral.
Cash financing can cost interest
The purchase of a new car in particular requires a fairly high initial investment on the part of car buyers. These discounts can often only be met with an installment loan or car loan. If you don’t take out a loan directly with the dealer, but through a bank, you usually have to pay interest. In this respect, part of the cash discount is eaten up again by the cost of the loan.
Nevertheless, borrowing from the bank usually pays off more than zero-percent financing. In times of low interest rates, borrowers with a high credit rating receive low-interest installment loans. For low or medium creditworthiness, a special car loan is recommended, with the vehicle title serving as collateral for the loan.
Conclusion: securing attractive discounts with cash payment
Especially when buying a new car over the internet, car buyers can expect high discounts if they can pay the purchase price directly. Even for used cars, at least small discounts of around three percent are possible. Against the backdrop of the current low-interest phase, taking out a loan from a bank and then paying cash is much more profitable than zero-percent financing through the dealer.