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]