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Have you ever had someone tell you how great of a deal they got on something? Well, I do quite frequently. The fact is that sometimes the deal really isnt a good deal at all. Why, you may ask? Because they bought with a loan versus cash. Lets take the car I drive for example. I purchased last spring from a private party for $2500. At the time the guy was selling it, it was worth $3,700 on Kelly Blue Book and he was asking $3,200. Now, my wife and I decided that we had a budget of $2,500 to buy a car, so I knew that this might be a long shot. However, to my amazement, the guy said that if I brought the cash, he would take it.

It turns out that when you list a car online, plenty of people are interested, but not many people are really serious about purchasing. He had fielded so many calls and had several people come to his house, that he just wanted to get rid of it. I just ran on it today, almost a year later and it is worth about $3,500! So i have gotten a ton of use out of it and I have not lost much value. That is the type of deal I like.

Now let’s say I purchased that from a car dealer instead. Unlike a Private Seller’, the dealer would not be prone to accept such a deal. After all, they have a huge lot to pay for, lot’s of inventory to upkeep, and not to mention payroll. Because of all these costs, they would more then likely sell the car for $5,000. Now, if I decided to finance this through a bank at 6.85% over 36 months I would have ended up paying $730 in interest. Then you would add tax, title and license fees on top of that, let’s say $495.

So lets review, since I paid cash from a Private Seller, I got the vehicle for $2,500 cash. If I would have financed it paid $6,225. That is a difference of $3,725. Now that is definitely a perk of paying cash!