I’m preparing to buy my first car (volvo s40 or audi a4) and looking for a bit of info before I sit down with the dealer to talk about the final price. Basically I’ve heard from various people that if one pays cash (as opposed to financing or leasing) they can ask and generally receive a slight discount off the msrp. I was hoping to get a better idea of how significant the discount tends to be, and what I should ask for.
cheers.
I’m not sure there is a factual answer to this, but here’s my take…
It depends. If you have a bank loan, that’s really not different from paying cash. The car dealer still gets the full amount at the time of sale. If you finance the car thru the dealership or thru a financial arm of the car company, there may be some consideration. But some car dealerships prefer leasing, and will try to push you into that option. Don’t assume that you’re getting a “deal” on a lease. If the dealer pushes that option hard, it’s most likely that the “deal” is on their end.
My two cents, as someone who has helped many friends and relatives buy new cars:
First of all, forget “msrp”, and forget how you’ll eventually pay. The only thing that really matters is the total price of the car. Financing, trade in, etc. all come later. Be polite, but firm. If the dealer insists on talking about financing, walk away. Do not let them get you into a soup of numbers. You only care about 1 number- the final price. Expect to do some haggling, and expect to be given the “let me talk to my manager routine”.
On those particular models, I’ll wager there is easily a $3-5000 difference between the highest price someone will pay and the lowest for the same exact model. If you educate yourself using the resources on the internet and in books you can find a pretty good estimate of what you can buy the car for. You can get the actual cost for titling, taxes, paperwork etc. in your location before you go.
Once you get that price, the dealer will try and tack on about 2K more for various other items. Other than the above taxes, titles, plates, etc. and perhaps a small fee for documents or DMV service, refuse to pay for anything else. You may again find they are inflexible, but if you threaten to walk away and they think you mean it, they will usually concede to remove all these extra items.
In general, The more demand for the car you’re interested in, the less bargaining room you have. None of the above may apply when buying a Honda Odyssey, for example. The two cars you mention are not the worst in this respect, but they’re not the best, either.
I agree with Mace.
I have an Uncle that works as a finance manager at one of the largest dealerships in Oregon, and another who works at a smaller dealership as a sales manager. I have been able to ask them for lots of advice and help as I have purchased cars.
The discount can range from a few hundred to a few thousand dollars, it has less to do with the fact that you paying cash and more to do with supply and demand for the car. For example, a couple of years ago I was looking at buying a new SUV. One I looked at was a Ford Explorer and sales were suffering. The dealer was willing to give $10,000 off MSRP if I financed the car with Ford Motor Credit, and only $2,500 if I financed it myself. I also looked at the Expedition but the dealer was only willing to give a free upgrade of a security tracking system. Expeditions were alot more popular at the time.
My suggestion would be to skip the dealership all togther. If you are ok with buying used (and hopefully you are) I would recommend buying a vehicle from a private party. Also, some areas have public auctions. You are allowed to start the vehicle but not drive it and I have seen people get some excellent deals.
And I agree with Doubt to 
Little slow on they keyboard today…
Buying used is pretty much out of the question because the Volvo s40 is a brand new model and I’m pretty sure I want the revamped 2005.5 A4, not to mention the new car smell.
I guess the best strat will be to do research on the web (as was suggested above) and find out what sort of deals other ppl have been able to haggle.
Take it from someone who has bought many many new cars, Stan Doubt has nailed it. Get the best price you can independent of the financing/cash/trade-in considerations. How do you find the best price? By going to a lot of dealerships and doing research on the net. When you go to the dealerships (and you can even do a lot of this over the phone nowadays), be sure to leave your checkbook and credit cards at home. That way, there is no way for you to be talked into a purchase until you’ve gathered all your pricing data. On the net, edmunds.com has some informative pieces on buying a new car. The last time I bought a new car, I did my research on the net, called a lot of local dealers, found the best price for the exact car I wanted, went to the dealer with the best price, test drove the car, paid the pre-negotiated price, and drove the new car home. No haggling, no “let me check with my manager” bit, etc. Good luck.