Auto Financing Tips: 5 Things You Shouldnt Say to a Dealer

Auto financing can be confusing, but it doesn't have to be. Before you head to the dealership lot to buy your new car, keep in mind these 5 things you should never say to your dealer.

Tip #1: Don't Bring Up Trade-In

Talk about your trade-in later.  Dealers know you'll be focused on getting as much as you can for your trade-in vehicle and will therefore be less inclined to negotiate the purchase price of the new vehicle you want to buy. Trade-in value and purchase price discussions can go back and forth, leaving you completely confused about the value of your new car.  Negotiate first - then talk about vehicle trade-in, after you've agreed on a purchase price, then you can move on to auto financing.

Tip #2:  Discussing Monthly Payment is a No-No

Dealers know that a good way to get you into a more expensive car is to show you a lower monthly payment you can afford. The monthly payment figures can be manipulated and can leave you confused about your re-payment terms.  Sometimes, the negotiations can leave you guessing whether a contract term is for a 24 months, 36 months, 48 months or 60-months.  Additionally, you can also lose track of what's really important - the price of the vehicle.  Remember to discuss monthly payments only once you get to the auto financing stage and well after you've locked in the purchase price.

Tip #3: If You Plan to Pay Cash, Keep it to Yourself at First

If you are paying cash, keep the information to  yourself while negotiating your price. Many times, if you say you're paying cash, the dealer knows they will not earn money on interest and can be reluctant to budge on purchase price negotiations. You may even wind up paying full sticker. Again, the time to talk about down payment or paying cash is when you get to the financing stage.

Tip #4: Don't Indicate You Need the Car

If you're desperate to get a car, don't let it show.  Dealers have a variety of tactics to assure you that you can be in your car on the day you shop for your car.  They prefer that you drive the car off the lot without a problem.  However, once you drive the car off the lot, you can end up paying more than intended for your new wheels. The best thing to do is to place your urgent need on the shelf and keep it to yourself to free yourself up to negotiate the best purchase price you can. Always be willing to walk away. There are other dealers who have the car you need.

Tip #5: What Not to Say About Financing

If you want to be in the best position for auto financing, get preapproved for your financing before you go to the dealership. Check banks and credit unions for the most competitive interest rate. Do not mention that you have financing to the dealer until you get to the financing stage. It can even be a good strategy to mention that you may be interested in using dealer financing, and change your mind later. Dealers will probably be willing to lower the purchase price because they think they will make the money back in interest. Remember to focus on the purchase price, all the other discussions should be discussed later.

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