5 Tips for Negotiating the Dreaded Car Loan

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When you head to the dealership to get a car, you’ll probably need a loan. Some people buy inexpensive used cars for cash, and a few buy expensive new cars for cash, but a lot of people can’t afford something like that.

They have to finance their cars and pay for them over time. There’s nothing wrong with doing that, but you want to know how to do it right. That way you’ll get the best deal available to you, and you won’t have to worry about whether you made a mistake or whether you could have gotten something that would have been a lot better. We’re all trying to look out for our money with the economy how it is.

Here are 5 tips for negotiating a car loan in a recovering economy.

  1. Know your credit information. If you have no idea what your credit looks like or what kind of credit score you have, you may quickly find that the car of your dreams is slipping through your fingers. That’s because people with poor credit pay higher rates for loans (if they can get them at all) and that higher rate will affect the dollar amount that you can borrow. If you know your credit score, you won’t be surprised by it and your expectations of what you can buy will be realistic.
  2. Have a down payment. If all you bring to the table is a car that you still owe on and have no equity in, a dealership isn’t going to be that interested in helping you buy something else. Bringing a paid-off car for trade or bringing some cash (or both) can show the dealership that you’re serious about the purchase and that you have the means to buy another vehicle.
  3. Check around. If the dealer offers you a six percent rate and you know your bank will give you a loan at a five percent rate, tell the dealership that. Have written proof. You have the power in that scenario, and the dealership may well be able to adjust the rate or give you other perks so you’ll finance through them.
  4. Pay attention to the length of the loan. The payment might sound good, but it could be because the dealership extended the payment term. Why would you want to pay on a car for six years or more? Will you really even keep it that long?
  5. Make sure you address special rates or other perks. If the dealer is offering something you don’t care about, it’s not a perk to you. See what else you can get, and ask about rebates and incentives. They may not be offered unless you specifically ask for them.

There you are. If you follow those 5 tips, you’ll get a loan that’s right for you. Depending on your credit, it might not be the loan you really wanted, but you’ll know that you couldn’t have gotten something better.

Even that can help you see that you did your homework and that you made the best deal you could. A lot of people don’t have perfect credit today, so you won’t be alone in your quest to find the best car loan for your circumstances.

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