Who says you can’t negotiate with lenders to get a better car loan? One of the biggest mistakes car buyers make is accepting the first loan offer they receive. They may get the financing they need to purchase the vehicle of their dreams. They won’t, however, get the best loan offer at the best rates. Put yourself at an advantage by using these negotiation strategies next time you apply for an auto loan.
Step One – Haggle Over the Price of the Vehicle
The less you pay for a vehicle the less you have to take out in financing. It always pays to haggle over the price, whether you’re buying a used vehicle for cash or a luxury sedan. Vehicle sticker prices are usually inflated because dealers expect to lower them to attract buyers. Don’t be afraid to ask dealers how low they can possibly go. Once they throw out a figure, do some online research to see if it’s actually a good deal.
Step Two – Find the Best Loan Offer Available
There are a lot more auto lenders than you expect. For instance, drivers with bad credit, no credit, or a bankruptcy on their record may get turned down for traditional financing. If that is the case, consider a subprime car loan or an after bankruptcy car loan. Just about any driver can get financing as long as he or she knows where to look. Get quotes from multiple lenders, then compare the details to find the one with the best rates and terms.
Step Three – Ask for Better Rates
In all honesty, most lenders will not budge much when it comes to interest rates. That being said, they may lower it a little if you employ the right tactics. Contact the lender with the best rates and ask whether they could reduce the rate to win your business. If that doesn’t work, contact the lenders with the second- or third-lowest rates and inform them you’ve found better offers elsewhere. Those lenders may be willing to give you better rates or terms in order to keep you from borrowing from the competition.
Step Four – Keep the Terms Short
Remember that payments are different than price. Price is the amount you pay in total to buy a vehicle. Payments are the amount you pay each month. Lenders will offer you low monthly payments, but then the duration of the loan is longer and the total price you pay is much higher. In general, keep the terms of your loan as short as possible while ensuring you’re still able to pay each month.
Step Five – Look for Alternatives
If you’re not able to negotiate a lower interest rate, try negotiating over other cost-savings. In addition to the vehicle price you can negotiate over service warranties or added dealership costs. You may be able to save money on our insurance policy, or on your gas bill by driving something more efficient. The point is that there are lot of ways to make a new (or used) vehicle fit in your budget even if you interest rate is non-negotiable.
Auto lending can be confusing and stressful, but it doesn’t have to be. Drivers who have been turned down for financing can still get a generous auto loan at fair rates. With a little bit of research and the right resources, it’s even easy to compare loan offers and confidently identify the best one. Don’t let lenders or car dealers leave you feeling discouraged. Options exist for every driver, every credit score, and every budget imaginable. Find what works for you and don’t accept anything less.
