US retirees shouldn’t always pay cash for their next car. Here’s why and what to do instead

Paying for a car successful currency is often considered a savvy fiscal move. After all, skipping an car indebtedness and avoiding costly monthly payments is simply a textbook illustration of disciplined wealth management.

Unfortunately, the car marketplace has evolved to a constituent wherever this strategy could really backfire and outgo you thousands much connected your adjacent purchase. The crushed is simple: car dealerships are often little consenting to negociate erstwhile you’re not financing the purchase.

• Dave Ramsey warns astir 50% of Americans are making 1 large Social Security mistake — here’s what it is and 3 elemental steps to hole it ASAP

• Thanks to Jeff Bezos, you tin present go a landlord for arsenic small arsenic $100 — and no, you don't person to woody with tenants oregon hole freezers. Here's how

• I’m approaching status with nary savings. Should I panic? Here are 6 casual ways to drawback up (and fast)

Here’s wherefore knowing however dealerships marque wealth could assistance you negociate amended and prevention wealth connected your adjacent car.

Before you caput to your nearest car dealer, it’s important to cognize that selling cars is simply a high-volume, low-margin business.

Although the mean terms of a caller car successful 2025 was astir $50,000, according to Kelley Blue Book, the mean retailer nett per portion was astir $2,202 arsenic of August 2025, according to JD Power. (1,2)

A important information of that comes from financing and add-on products specified arsenic warranties, according to Kelley Blue Book. (3) Dealerships tin gain astir 1% of the indebtedness magnitude successful financing commissions, meaning $40,000 successful financing tin make astir $400 successful further nett for the dealer.

And since much than fractional of each car loans are provided by captive lenders — the financing arms of car manufacturers — dealers whitethorn besides person bonuses oregon incentives for enrolling customers successful semipermanent loans. (4)

This is wherefore financing a car tin marque a trader much consenting to negociate the upfront price.

Cash buyers efficaciously destruct this backend gross stream. As a result, erstwhile a trader knows you’re paying successful cash, they whitethorn beryllium little inclined to connection assertive discounts connected the vehicle’s sticker price.

This dynamic tin perchance outgo you thousands of dollars much connected your adjacent purchase. If you’re retired, this creates a peculiar challenge, due to the fact that you whitethorn look a prime betwixt paying much upfront oregon taking connected an car indebtedness aboriginal successful life.

Fortunately, determination are ways to navigate this strategy strategically without getting trapped successful semipermanent debt.

Read More: The mean nett worthy of Americans is simply a astonishing $620,654. But it astir means nothing. Here’s the fig that counts (and however to marque it skyrocket)

If you’re successful the marketplace for a caller car but reluctant to instrumentality retired a caller car loan, debar telling the dealership however you program to pay. By keeping the treatment of outgo separate, you tin perchance negociate a amended terms earlier finalizing the deal.