Negotiating the Best Car Loan

There are few purchases in which you can negotiate the terms of the deal; buying a car is one of them. Part of the fun of buying a car is getting the best possible deal. The bargaining begins when the dealer and the loan officer tell you the price of the car and the cost of the loan. They will make these figures sound as if they were non-negotiable. If you accept them without question, you have lost the game.

Is That the Best You Can Offer?

If you are shy about negotiating, start off with the following statement. “What is the best possible deal you can offer me?” This question puts the dealer and the loan officer on notice that you are there to negotiate. Unfortunately, it does not guarantee that you will get anywhere near their best offer.

Do Your Homework

The first rule in negotiation is to be prepared. You need to know what the car is worth and what you are willing to pay for it. And you need to know the best loan you can qualify for. Remember, your dealer knows what his bottom line is – how much money is the least he is willing to make on each car, whether it comes from the sale or the financing. You can find out what a dealer’s costs are by going online and getting the actual dealer’s costs. Then add 5 percent to his costs and that is what you offer. Since he is happy to make 3 percent, you are not hurting the dealer and you are not paying thousands extra. Now do the same thing for your loan. Find out what your credit rating is by checking it out with your bank and then find out what the best possible interest rates are for your score. Do not accept less than the best possible deal.

Walking Away

The last step in negotiation is to make your carefully researched proposal, which must be fair to both parties. Now wait for the response. What happens if he does not accept your proposal? The best way to prove that you are negotiating in earnest is to show your willingness to walk away from the deal. This step should never be taken in anger or without conviction. If you are not willing to walk, you prove that you are willing to accept whatever is offered. Smile and thank your dealer/lender for his time. Stand up, extend your hand and give him your card with your number in case he changes his mind. If you get all the way to your car, you may still find a message waiting when you get home. Your offer may be met with a counter offer. Be prepared to either accept it or hold out for your best deal. Just remember, there are always other dealers and lenders out there who are willing to make a better offer.