Why is the cash price for a car higher than a financed price?

Is it better to finance or buy a car with cash? I was at the dealership yesterday looking for a new car and the dealer said that if I financed the car through him then he could knock $2k off the price. I was planning on paying cash, but if it's the same price to finance the car, it makes more sense to get a car loan.

Answer provided by
Johnny Puckett
Answered on Jul 07, 2021
Johnny Puckett is a freelance writer and automotive expert. He has contributed content to a number of some of the largest online publications, aftermarket automotive manufacturers’ sites, and automotive informational sites. His experience in the automotive and information fields informs his writing at Jerry. His automotive interests bleed into his free time, where he enjoys modifying his favorite cars and woodworking.
“The dealer is likely trying to sneak in charges when buying a new car. You are going to pay that $2k whether you finance the car or not. You’re just not gonna notice it if it’s spread out over the life of a loan.
My suggestion is to go to a different dealership and do not talk to the dealer about financing or paying cash. Let the dealer assume you will be financing and if the topic comes up, just say you haven’t decided yet.
Negotiate with the dealer based on total price minus any add-ons. Your final amount should account for:
  • price
  • tax
  • tag
  • title
Once you reach an agreement you can live with, pay the dealer in cash and refuse to pay for anything other than the agreed upon amount.”

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