If you have not been following along on my past few Sundays of my griping whining complaining sharing with you about my sad issues with my 11 year old Kia, then you have really been missing out (well, no, not really, but let’s move on).
Yesterday I final sold it for $500 cash and I am told that is way more than scrap value of the metal the van was made of (the engine was dead). However, get this, the people who purchased the van had a tree almost cut their similar year Kia in half and the engine was like new. So, I had my perfect van (with $2500 worth of new attempted repair parts inside) to sell them and they can yank the engine from their van and put in my van. #Winning on both sides and a story along with it. I love it when a plan comes together!
But none of that has anything to do with you and the idea of today’s post. You see I am buying my new car on travel cards so I can earn points. Can it be done? You bet it can. But there are things you need to know if you want to try this.
First off, as we all know, buying a new car is a negotiation for the best price. The dealer wants to extract as much money from you as they can and we want to pay as little as possible for the new car. So, I started with the fact that I was NOT financing the car but just paying outright for it. I did not mention how I was going to pay for it, just that I would not need any financing. Yes, power in negotiation matters when buying a new car.
Once we had a final price I was willing to offer them I mentioned I would be paying in full with a credit card. As you can imagine, that did not go over so well. The young man who is my sales rep was somewhat floored by my statement of payment method. He stammered that the max value I could pay with a credit card was $4,000. I indicated that was not how this was going to work and if my local dealer would not allow payment with a credit card, I was sure I could find another dealer that would (I did not mention I have enough miles to fly anywhere to get it, but I did think about it).
Anyway, I let the offer stand for a bit. I really knew paying in full was a huge ask considering the final bottom line price I had worked out (or at least in my mind it was a great price). But also during this time I visited a Simon Mall and happened to end up with a boat load of VDGCs that I turned into money orders (MO). So when my rep called back I offered to pay 10k with money orders, i.e. the same as cash, and the remaining 13k on a credit card (if you want to know I chose my US Bank FlexPerk card). This offer was accepted by both sides.
I have so far put $500 down, via an MO, and am awaiting delivery and final payments. I have thus, via my own efforts, earned points on the total purchase price of the car. Maybe not as great a reward as full credit card payment but I have been able to liquidate a nice chuck of MOs and charge a sizable amount on a travel card earning a sweet reward back in points. Not bad.
Just as an informational bit, I do not ever pay a penny of interest on the card I charged this large purchase on or the card I purchased the MOs on. Yes my savings account will take a hit but I do not pay interest on travel cards or on car loans. That is how I “roll”! 🙂 – René
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I’m glad you got this deal worked out. Having dealt with car dealerships in my job for many years I think it’s a mistake to walk in and tell them up front that you don’t need financing. Dealers make a large chunk of profit on the financing end. Most people assume that you control the deal when you tell them that it will be a cash deal but most of the time they will be less likely to come down on the price as much when they know there is no back end deal.
You may have gotten the best deal anyway but as a rule of thumb they assume everyone comes on the lot needing financing. I would work out the deal before you mention that you “might” just pay cash. By then it’s too late for them to take this into consideration.
Why not negotiate or find a vehicle with 0% interest and invest the 23K in something that will give you a better ROI?
Great article, Rene. Just curious, why was the flex perks card the best option from your credit card arsenal for this purchase?
@Wes – Needed FlexPerks points ie I was low on them.
You’d have been better off from a negotiating standpoint not telling them up front that you were paying cash. They make money on the financing. By telling them up front, you let them know they wouldn’t make that money anymore. That knowledge got reflected in the price you negotiated.
@Bobby, you normally lose if you go with 0% financing. Typically when a car manufacturer bas 0% financing you give up a nice rebate. But if you can find a zero percent loan without giving up rebates (I did it once one a Toyota) and you invest the money right it can be a great deal. The last time I financed a car was in 03 with Toyota and got a zero percent loan and used the cash I was going to use to buy the car to pay off my mortgage. I had a decent rate of around 4% fixed on my mortgage but even giving up the tax breaks on the mortgage interest it made sense to pay off my mortgage and pay zero percent on the car.
A lot of dealers have a limit of $2,000 to $2j,500 on credit cards and won’t budge. I’m sure it’s mostly due to their transaction fees but I was told if someone finances the whole deal on a credit card they dealership can run into issues if someone contests the charge with the bank.
If you can finance at least 10K of a car with a credit card that would be great for helping to meet minimum spend requirements for incentives like the MQM’s on the Delta Am Ex.
I also agree you should never mention financing until you have a firm price. Paying cash for a new car isn’t usually a good deal for a car dealer since they usually get incentives from the finance company. Something else to be careful of is to make sure to read all the paperwork and make sure there isn’t fine print authorizing them pull a credit report. A friend of mine paid cash for a car a couple years ago and the dealer had it in the paperwork they could pull a credit report if he was using a personal check. He told them to either scratch it out of the paperwork or he would pay with a bank check (which meant bringing it back on a Monday and it was a Saturday) or a wire transfer (which again meant waiting until Monday and the possibility they would pay a wire fee and his account is set up not to charge wire fees). The dealership agreed to scratch that item
Last year I bought my wife a new Subaru with my personal Delta Reserve Amex. We settled on $25,000 plus my trade-in. I agreed as long as I could use my card for the total amount. The salesman said the dealership had a limit of $5,000 on credit cards. I said that that was the my offer and to take it to his sales manager . He came back 5 min later and said let’s do the paperwork ! The fact that it was a rainy Saturday afternoon near the end of the month probably helped.
I paid the charge in full when the statement came, so I incurred no extra costs. I netted the Skymiles plus the 15,000 MQMs after another $5,000 of card spend.
So you paid $5 for each gift card? Where did you get to exchange 20 gift cards for money orders without getting kicked out!?
I got a new Ford Escape a few years ago, priced through the Costco website + a Z Plan certificate. When we were all done I told them I wanted to pay the $27k with a credit card or there was no deal. After some discussions they agreed to Visa or MasterCard, but said no to an AMEX (I had really wanted to use my Delta Reserve), so I got $27k points on my Barclaycard (worth 2.2% at the time).
BOOM! I just did the same thing!
Congrats on the new car! 🙂
Last car I bought Cody 50k after trade. I handed the rep my Amex platinum. He said Amex only allows 2500. I said I have unlimited credit, let’s call Amex and verify. (I know Amex will approve, I called them that morning). Also, Amex might pull dealers acct if dealer does that too often
Sales rep ran to manager who said he would personally (!) authorize 10 k. I pulled out my phone and started calling Amex. Mgr stopped me. We renegotiated $1500 (3%) discount for bank check. I walked across the street and got the check.
Cash on hand plus knowing your rights saves big money
@Rene, who were the MO made out to? This is intriguing.
@DW – I make them out to the auto dealer when I give them to them.
@Frank – There are many places you can get 1k MOs. Read the Flyertalk board about MS
There’s a car dealership with several locations in my town which will allow you to pay entire purchase price with AmEx (not Visa or MasterCard). I’ve purchased 2 subarus and a Honda (also sells Chevrolet, VW, and BMW) in the past 2 years. I always get my best price from contacts with other dealerships in the mid-Atlantic, then go to my dealer and offer this price. No extra fees. There’s a special deal they’ve got with AmEx according to the owner, who’s a friend.
Rene, I have to agree on the Costco program to purchase a new car. Saved over $6,000 over the best price I could find on the same car a few years ago. if you have a Costco membership, check it out. No haggling because the price is already negotiated between Costco and the dealership in advance as part of their agreement to participate in the program.
Nice job! I bought my most recent car right after getting the AARP card from Chase, back when it offered 5% back for the first months. I was able to charge $10,000 for the car at the dealership, if I agreed to take out a loan to finance the rest. I discovered I could make my loan payment with a credit card for a fee of about 1 1/2% so I paid off the car loan within the first month!
It was pretty sweet!
But then when my car loan showed up on my credit report it triggered an Amex FR (I took a short period car loan so the monthly payment amount was quite high), and that was a bit of a challenge. 😉