How to Negotiate Discounts for Paying Early

Remember the saying, 'cash is king'? It is true. Cash can be a driving force when you are buying something. If you are a cash buyer it is good to understand the value to the seller of your paying cash. When you pay with a credit card, the seller pays fees to the credit card company. If you pay over time the seller loses interest on the cash. So the seller has a reason to value cash.

Tips on how to negotiate discounts for paying early when buying:
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1. Do your research to understand the value of cash to the seller:


  • Determine the cash differential the seller loses when selling to you on terms.

  • Gently question the seller to see if he or she might have a need or other use for cash at the moment.

  • How badly do they need to sell? If you are willing to pay cash, at a discounted price, but unwilling to pay the full price on any terms then the seller must decide to sell at your price or lose the sale.

2. Determine the value of the cash to you:


  • The interest you would lose.

  • The lost benefit of not using the cash for another opportunity.

3. Make a cash offer discounting the price by twice the assumed differential value to you or the seller.

4. Be prepared to walk away from the negotiation if the seller will not offer a reasonable discount for a cash payment. If it comes to this, by indicating you are willing to walk, the seller may come back with a viable 'final and best' offer acceptable to you.

There are also opportunities for paying obligations early. Such obligations may be to landlords, lenders or other sources of credit. How badly do they need cash? If you are willing to pay down a note or prepay rent you should get a fair return for doing so.

Tips on how to negotiate discounts for paying early on obligations:

1. Do similar research to understand the value of cash to the landlord or lender and to you:


  • Gently question the landlord or lender to see if he or she might have a need or other use for cash at the moment.

  • The interest you would lose.

  • The lost benefit of not using the cash for another opportunity.

3. Make a cash offer discounting the obligation by twice the assumed differential value to the landlord or lender.

4. Be prepared to withdraw your offer to pay early if the discount is not meaningful. If it comes to this, by indicating you are willing to walk, the landlord or lender may come back with a viable 'final and best' offer that is acceptable to you.

Cash is important today. The most important aspect of having cash or receiving cash is the opportunity value of using it wisely. Understanding how to negotiate discounts for paying early or in cash can help you save money.