I feel like this is an exceptionally dumb question but, does paying in “cash” limited to paying with paper currency? Or would paying for something, say a vehicle, in full and with a debit card also qualify? so, basically, does not paying with credit or in payments qualify?
Also, paying in full with a debit card is a preferred method for a car dealership, right? Would that be something that one could offer in negotiation in order to bring the price down a bit?
Thanks for anyone who answers this. Much appreciated and have a good day.
In: 9
Two answers,
1. Paying in cash van literally be paying with cash tieder, bills and coins, gas stations sometimes have a cash price for gas and a credit card/ debit card price, because it cost them a processing fee to run your card, and as such they pass that charge along to the customer.
2. Now another way to pay in cash is to not pay using financing or other form of credit. This could be cash tender, writing a check, or going to the bank and procuring a cashiers check. In these cases, the money transfer in nearly instantaniou or requires no further processing. Checks are considdered cash payments because they are one of a few assets called liquid assets.
A liquid asset is considdered money, or capitol readily on hand that can be used for immediate expenses or purchases. Typically these would include checking accounts, savings accounts, and cash on hand or maybe sitting in a safe. Some assets are non liquid we see these as investment accounts, CDs, equity we have built into the things we buy, like how much of the car you own after making payments. The car you drive has a selling value, of which you’d be able to keep whatever is left over after paying off the loan. The act of selling an asset to generate cash is known as liquidating.
This is why a trade in credit is not considdered a cash payment, because the vehicle needs to be sold before the liquidated value is applied to the sale. Before it is applied the trade in value is considdered a loan toward the down payment, with the vehichle being the only nessesary collateral for the loan.
The main justification trade ins are always lower value than the book value is because there’s always the risk that they can’t sell the vehichle at book pricing at auction. Also the expense of liquidating the trade in lowers the price, and of course the need to make a profit on the trade in.
To recap, cash is a liquid asset, either cash tender, coins, checks, or easily accessible accounts.
Everything else, investment accounts, non liquid assets, loans, and lines of credit are not cash.
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