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

Steph Willems
by Steph Willems
you d value your car more if you paid cash for it

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]

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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 :).

  • Sgeffe Why on Earth can’t you just get the torque specs and do it yourself if you’re so-inclined?!
  • Sgeffe As was stated in another comment, the FAA nominee went down in flames. But the NTSB chairwoman certainly didn’t, and she’s certainly not qualified either!Lots of this kind of stuff going on both sides of the aisle—Ben Carson would have arguably made a better Surgeon General than HUD Secretary under Trump, for example.
  • Art Vandelay Interesting, the Polestar 2 I had as a rental utilized Android Automotive which is what GM said it is going to exclusively, yet it still offers Apple CarPlay according to this. Wonder if GM will do the same.
  • Stuart de Baker EVs just aren't ready for prime time for those with a single car and who take road trips. Being able to charge as soon as you arrive at a charging station, and even the chargers working on your car is a crapshoot. In the former case, you could have to wait for nearly an hour while someone else is charging.I also don't find EVs particularly fun to drive (I've driven a Tesla Model S and an Ionic 5.) I LOVE driving my '08 Civic (stick). I love the handling, the feel and responsiveness of the engine, the precise steering (the Michelin Pilot Ultra Sport tires help, but even with the snows on, the car is a joy). I have 152k on the clock, and hopefully another 25 years or so of driving (I was born early in the Eisenhower Administration and I have exceptionally healthy habits), and I'm going to try to keep the Civic for the duration.My Civic causes a less global warming emissions than some of these humongous battery operated trucks.
  • FreedMike They should throw in a Lordstown pickup with every purchase. Make it the “vapor twofer.”