Negotiationg The Best Car Loan Rates

Car loan rates are not set in stone at the time you receive your first quote. Applicants who accept the first terms they are offered will not get the best loan possible, and negotiating a loan is part of the financing process. Negotiating car loans is not an easy process for most borrowers who do not have experience in the area, but it can be done painlessly if treated professionally and with a direct approach.

Seek Multiple Quotes

Do not simply look to the car dealer for financing options. Banks and other dedicated lenders often present better loans than dealers themselves. While dealers may offer low interest rates, the terms of the loan are usually better through a bank or lender. Today, it is easy to get quotes through simple online forms that take very little time to complete. Even if you want to use the dealer's financing, it is a good idea to have other quotes so you can compare the deal you are getting and negotiate for yourself.

Adjust Terms

Car loans, like all installment loans, come with a variety of terms that may be used to negotiate the best option for yourself. The primary terms of a car loan include the down payment, length of the loan and monthly payment. A larger down payment can lead to a shorter and less expensive loan. Similarly, if you can afford higher monthly payments, you may be able to get a lower interest rate. One option to consider with auto loans is whether the loan will be secured against the car or unsecured. Dealers usually offer secured loans, which come with lower interest rates but a higher risk to the lender. Banks may offer unsecured loans, allowing you to own the car from day one and not place it as a collateral in exchange for a higher interest rate. 

Ask for Incentives

If you are working with a dealer, the dealer wants you to buy a car from them and arrange financing through them. This means they will make money on both ends of the deal. Often, dealers are willing to provide additional incentives to make this happen. Ask about reducing the sticker price of a car if you use the dealer's financing. You may also be able to secure a longer warranty for less money in exchange for paying a higher interest rate on the loan. Considering these options allows a borrower to truly capitalize on the idea of purchasing and financing through one location. You will not get these incentives if you do not ask.

Walk Away from a Bad Deal

The key to negotiation is to know your limits. If you are not getting the deal you want, you have to be willing to walk away from the table. Borrowers who do not set these limits will end up signing a loan that is not acceptable. Do not get tempted by the new car; remind yourself that there are plenty of opportunities to get a new car. You can walk away from a financing option, and you will often find the dealer will come back to you with a better deal.


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