When you’re in the market for a new or used vehicle, you want to make sure you’re getting the best deal possible. If you’re buying at the dealership, that may mean taking some time to prepare. If you know your facts, use an auto loan calculator to see how much car you can afford, and anticipate the sales tactics often used by dealerships, you’ll be ready to negotiate for the best deal possible.
- Don’t be a pushover.
You may be dealing with the friendly sales staff or a pushy “Business Manager” when it comes time to arrange financing at the dealership. Either way, don’t fall for their tactics. Sales staff are trained play the role of your buddy while at the same time draining you of every possible cent.
Remember that sales agents and business managers earn money based on commissions. They make most of their money by selling you “extras” on the vehicle. They are likely to massage the numbers so the financing deal works in their best interest, not yours. Don’t simply give into what they offer, but think through what you need and stick to your guns.
- Do get third party financing.
Research auto loan options online and compare financing terms using an auto loan calculator. You should always know the going interest rate and get several offers from outside banks. Print them off and take them with you to the dealership so you’ll have the power in your hands.
- Do negotiate for the best interest rate.
If you aren’t able to get third party financing and end up having to go through the dealership for an auto loan, you still don’t have to accept their first offer. Consider the terms of the deal, including the length of the loan, interest rate (APR), and any early payoff penalties.
Since you did your research, you should know if what they’re asking is reasonable. If it isn’t, don’t be afraid to ask for better terms on the deal. Also, before you sign, plug the details into an auto loan calculator and make sure you can afford the monthly payments.
- Don’t go in for too many “extras.”
You will probably have to carry a certain level of car insurance (comprehensive and collision are commonly required for an auto loan), but be skeptical about multiple layers of credit insurance, extended warrantees, and other extras. Remember, this is where the sales department makes most of its money, so you probably aren’t getting a very good deal on most of these items.
- Do know your stuff.
Visit the manufacturer’s website and research the available factory incentives. Take a look at the Kelley Blue Book value for your new car so you’ll know how much it’s worth. Also, use an auto loan calculator so you’ll know how much you can afford. If you can’t get a financing deal that works for you, don’t be afraid to walk away.