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
I just realize in Spanish we have a word for that.
Efectivo: Means bank notes, coins.
Contado: Means one single payment, regardless it is cash, credit card, etc.
Of course no food stand will say contado, but obviously will say efectivo.
I have always understood “cash” to be the literal “paper” currency. As in bills such as $5, $20, or $100, etc… If there is another definition of “cash” (for the purposes of payment), I am unaware of it.
The line blurred with bank cards. It used to be that you paid with cash (legal tender, aka bills and coins), check (ya, those things), or credit card. The benefit of cash being, of course, that it doesn’t bounce or get rejected by the credit card issuer.
So if we’re being pedantic by definition, cash would probably mean ‘legal tender’, but given the instant and secure nature of digital payments these days, I think a person could make a decent argument that any instant payment that makes the funds available to the recipient immediately could qualify as cash.
I bought a car for 5k and was asked if I was paying in cash or financing. When I went to pay and pulled out the ol’ debit card they refused to take payment and the finance guy was pissed at the sales guy for me not having it in cash cash. How dumb of me to assume they werent just asking “are you taking a loan or do you have the funds for this yourself”. It depends on the place it seems.
It’s sort of a good question, because the answer is, “It depends…”
If you’re buying something small it usually means you paid using actual currency. But how small is small?
Usually if you are buying something that most people would finance (pay for using a loan) like a car, boat or house, and you did _**not**_ finance it. You would say you paid in cash, even if you paid using a check or debit card or inter bank payment of some other kind. Usually it comes down to if you have to pay interest on the purchase or not.
Sometimes (like super rarely) you might hear of someone who also paid for a big ticket item with a credit card and then immediately paid that credit off and they might be able to claim that they paid cash for the item. I’m brought to mind of some rich person who bought a famous work of art and put the purchase on their Amex card to get the credit card points. They ended up with millions of points just by passing the purchase through the Amex service. They paid off the card right after. I’d be willing to call that a cash deal but only because they paid off the credit before having to pay interest.
Another example where “paying in cash” comes into play… let’s say you’ve got a contractor working on your house. He might tell you he can finish the project for $1600… but if you pay in cash he’ll charge $1300.
In this instance he’s suggesting you pay in cash so there’s no formal record of the transaction as there would be with a credit card or check… and he’s doing this to avoid paying taxes.
This is similar to when people say a transaction is “off the books.”
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.
Latest Answers