4 Quick Tips for how to Negotiate an Auto Loan

You are finally going to buy the car you wanted. But if you are going to buy with an auto loan, you need to prepare yourself to negotiate a good deal.

You won’t be hit with the best deal at first, so you will need to fight for it (not literally). Let the following tips help you out!

 

#1 Negotiate the Price

This only sounds simple. You need to use different tricks and be prepared for backfires because the salesman deals with such things daily.

You will be asked questions like how much can you pay one month, or what do you want your payment to be. The fact is, the lenders love to discuss monthly payments instead of the whole price.

This is their trick, and you have to converge them to an allover price.

 

#2 Skip the Formalities

If the finance lenders have it their way, they will make you buy every auto loan they have. They will even sell gap insurance, fabric protection, rust proofing, extended warranties, and what not.

They don’t do it because they care about you. They do it because they want you to pay more and more.   Some of these are useful, but most are an excuse to make you pay more. Companies make great profits by ripping off their loyal customers from on such products.

You can get extended warranties, and alarms for affordable rates in the aftermarket. You don’t need rustproofing for modern cars. But you can apply for paint protection yourself. Gap insurance is useful, but you can search it for an affordable price.

 

#3 Avoid High Premiums

Your previous credit history plays a big role in the premium you get with your auto loan. Just because your credit history is less than perfect, it doesn’t mean you should work with a high-interest rate. 

If you have a fair credit history, you can get a pretty low-interest rate, but only if you know how to negotiate. If you have an average credit score, you can get between 10%-20% interest rate.  If you have a bad credit history, chances are you will get a high-interest rate between 20%-35%.

With all being said, you should avoid getting a loan with much higher rates. Your credit situation is sometimes exaggerated to extort more money. The bottom line is, it’s not worth to pay such high-interest rate just to own a car.

 

#4 Don’t be Emotional

Buying a car is perhaps the second biggest investment, the first one remains your home. With that being said, there is a high chance you will let your emotions cloud your judgment. After you are gown for a drive and got a knack for the car and its smell.

It’s hard to pass it up. If your dealership is not negotiating, you better be prepared to walk away. Keep in mind; they are not doing you a favor by selling a car. You are paying money for it. Therefore, you should control your feelings because you may get stuck in a bad financial position, and you may regret your decision later.

You are paying money for it. Therefore, you should control your feelings because you may get stuck in a bad financial position, and you may regret your decision later.

What are you doing to negotiate on your new vehicle?  I know for me I went in with the attitude that I didn’t have anything to lose.  I already had a great vehicle and this forced them to give me a better deal.

I would love to hear what you have to say about this in the comments below.

Cheers!