When you go in for a car loan, there will be a great deal of negotiation and back-and-forth. The dealer, after all wants to get as much money out of you as possible, while you want to pay as little as possible. The truth is, the advantage is yours—the dealer probably wants to sell more than you need to buy. If you keep a few tips in mind, you will get a better deal. Here are our tips to getting a good loan at a dealership.
Negotiate the Purchase Price
The dealer will try to hit you with monthly payment talk. This is a trick. Never tell the salesman what you can afford each month—this will limit your ability to negotiate the purchase price. Never play poker with your cards face up on the table, in other words. The dealer can use a monthly payment deal to disguise hidden costs and high interest rates. If you negotiate the car’s purchase price first, you can work out the details later.
Know Your Credit Score
If you know your credit score going in, you know where you stand. You can challenge the dealer if you know your rating. If you don’t know it and the dealer tells you that your credit rating is only 305, you’ve really got nothing to use to fire back, and your car loan will suffer for it. Even a slightly better credit score can end up saving you hundreds of dollars in interest over the course of four years.
Stay in Your Budget
Know what you can afford and stick to it. Don’t let yourself get talked into additional bells and whistles, a higher cost luxury car, or the like. Don’t let the dealer roll negative equity into a new loan. If you are told you owe more on your current vehicle than its trade-in value, seek other avenues to dispose of it. Either sell it at a higher value, or come up with the means to pay it down some more before buying a new car. Going in over your budget will only get you further into credit trouble in the future.
Say No to Add Ons
Many dealers will try to sell you on fabric protection, high end accessories, and specialized paint sealant. The truth is, you can get all of these things aftermarket for much cheaper than the dealer will offer, and you won’t have to have them rolled into your monthly payment with interest.
Be Willing to Walk
Remember, your dealer’s paycheck depends on selling that car. You, on the other hand, have dozens of dealers to choose from to get one. If the dealer you’re working with won’t budge or give you the deal you want, there’s probably another one. Willingness to walk away is the first rule in negotiation.
If you keep a few tips in mind for getting a good loan at a dealership and are willing to play it tough, you can save a lot of money on your new car loan.