International Baccalaureate (IB) Practice Exam

Which payment method typically provides more bargaining power during negotiations?

1. Using credit cards

2. Making payments through online banking

3. Using cash

4. Making a payment plan

The correct answer is: Using cash

Using cash during negotiations typically provides more bargaining power for several reasons. Cash is a tangible, immediate form of payment that can facilitate quicker transactions. When a buyer offers cash, they signal to the seller that they have immediate funds available, which can create a sense of urgency for the seller to close the deal. This immediacy often gives cash buyers an advantage, as sellers may be more willing to negotiate on price to ensure that they receive the money right away. Additionally, cash transactions eliminate the uncertainty associated with credit card payments or financing options. Sellers may be wary of potential chargebacks, approval delays, or additional fees tied to credit transactions, which can make them less flexible in negotiations. While other payment methods like credit cards or payment plans can provide convenience and flexibility, they often come with terms and conditions that can complicate the negotiation process. Online banking may lack the immediacy that cash provides, making it less compelling in terms of leverage.