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Paying with cash won’t necessarily get you a better deal

POSTED: October 23, 2008 5:00 a.m.

Cash on the barrel head.

In the business world, it was once the preferred payment option. Today, various forms of credit have made cash an also-ran among choices for payment.

Butch Miller, a Gainesville Honda dealer, said that payments for a financed car actually end up in his company’s bank account faster than he can process a written check and get it deposited in the bank.

Having the ability to pay on the spot, once thought to be a form of leverage in a retail transaction, has little or no impact on the price you pay for goods, merchants say.

"Back when we were in the financing business, cash spoke loudly," said Ben Martin of Martin Furniture Co. "Now, we are virtually out of the finance business and we go through a finance company and they pay us almost immediately. If someone wants 12 months same as cash, we take a little bit of a percentage hit, but the finance company pays us within days."

Cash, in these instances, does not refer to having dollar bills in you pocket, but having the amount of money needed for a transaction in your bank account.

The one place where cash still carries a significant impact is real estate.

"Cash gives consumer confidence," said Frank Norton Jr., a Gainesville real estate executive who tracks economic trends.
"Cash speeds up the process."

For individuals with money to spare, Norton said there are real estate bargains, and cash can be the leverage that tilts an offer in a buyer’s favor.

He said cash may not be helpful when trying to negotiate by telephone with a national mortgage company on a distressed property.

"But to the local seller, cash is king," he said.

He said if a seller is looking at two offers, one contingent on financing and the other for cash, the cash offer becomes much more attractive to the seller.

"Even if the cash offer is slightly below my target price, as a consumer there is more confidence in cash," Norton said.

Tim Hayes of Hayes Chrysler-Dodge-Jeep in Oakwood said the price of a vehicle is not affected by a cash offer.

"Cash can make the deal go faster because you eliminate the financing step," Hayes said.

In previous months, some of the incentives on new cars were tied to manufacturer’s financing. In some cases, paying cash might have eliminated as much as $1,000 in incentives.

But the real incentive, Hayes said is price, whether cash or financed.

In September, Dodge offered as much as 50 percent off the sticker price of a new truck.

"You had a $30,000 truck and you were paying around $15,000," he said, adding that the discounts helped reduce his inventory of 2008 models.

Miller, a partner in Milton Martin Honda, said the Japanese automaker does not offer a rebate program.

"Honda has never offered a cash-back incentive program," Miller said. "We have, from time to time, offered special rates on financing for well-qualified customers."

Miller said getting customers financed for a car purchase has not been a problem.



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