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 :).

  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
  • Oberkanone Where is the value here? Magna is assembling the vehicles. The IP is not novel. Just buy the IP at bankruptcy stage for next to nothing.
  • Jalop1991 what, no Turbo trim?
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