You'd Value Your Car More If You Paid Cash For It

Steph Willems
by Steph Willems

Want to feel a real connection to something? Pay cash for it.

Research shows the act of handing over real, honest-to-God paper money and coins for a product has a profound impact on the value a person places in that product. Suddenly, it turns into a possession.

A study published in The Journal of Consumer Research explains the weird phenomenon. Authored by Avni M. Shah (University of Toronto), Noah Eisenkraft (University of North Carolina), James R. Bettman and Tanya L. Chartrand (both Duke University), the study’s findings all relate to pain — the pain of parting with money.

“Using cash or check seems to increase the psychological ‘pain’ or sacrifice of the act and creates more affinity with the product or brand,” the authors wrote.

Cash is hands-on, while credit, debit, or payment plans spirit away your hard-earned money out of sight, and mostly out of mind. It’s the difference between taking out a target with a remotely piloted drone or strafing it low and slow with a nose-mounted 20-millimeter cannon.

Shah tested the effect while she was a doctoral student at Duke. The experiment was easy — sell discounted university mugs to faculty members for $2, with half of the buyers forced to pay with cash and the others with plastic. She then tracked down each buyer and asked to buy them back.

That cheap mug had very different resale values, depending on how the buyer paid. Staff who used a card wanted an average of $3.83 for the mug; those who paid cash $6.71. The mug had a hold on them.

It’s not hard to apply the lesson to new vehicle sales. Departing with a massive chunk of cash in one act is far different than signing a contract and having the money slowly leak out of your bank account over the course of 24, 36, 48, 60, 72 … whatever, you get the picture.

[Source: New York Times] [Image: Frankieleon/ Flickr]

Steph Willems
Steph Willems

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  • Jeff S Jeff S on Jul 20, 2016

    Good advice, use the 0 percent or 0.9 percent interest if you quality for it and take care of your vehicle and make it last.

  • Jthorner Jthorner on Jul 21, 2016

    Twenty years ago my wife and I adopted the policy of not buying anything except real estate if we couldn't pay cash or write the check for it. As a practical matter we use credit cards in our daily lives, but we have routinely paid them off in full every month for decades now. No wonder we are still driving 2003 and 2006 vehicles we purchased brand new and wrote checks for. It does really focus the mind :).

  • Syke Kinda liked the '57, hated the '58. Then again, I hated the entire '58 GM line except for the Chevrolet. Which I liked better than the '57's. Still remember dad's '58 Impala hardtop, in the silver blue that was used as the main advertising color.
  • Dartdude The bottom line is that in the new America coming the elites don't want you and me to own cars. They are going to make building cars so expensive that the will only be for the very rich and connected. You will eat bugs and ride the bus and live in a 500sq-ft. apartment and like it. HUD wants to quit giving federal for any development for single family homes and don't be surprised that FHA aren't going to give loans for single family homes in the very near future.
  • Ravenuer The rear view of the Eldo coupe makes it look fat!
  • FreedMike This is before Cadillac styling went full scale nutty...and not particularly attractive, in my opinion.
  • JTiberius1701 Middle of April here in NE Ohio. And that can still be shaky. Also on my Fiesta ST, I use Michelin Pilot Sport A/S tires for the winter and Bridgestone Potenza for my summer tires. No issues at all.
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