Have you ever felt like you purchased and financed a car and just don’t know if after it was all over, you got the right price or financing arrangements? Well, do not feel alone. For many people who make auto transactions, this is a typical experience.
You will find guidance for negotiating the car price elsewhere, but we want to share some helpful tips for financing the vehicle at the best terms and conditions for you.
The first step is to ensure that you negotiate the price of the car separately from the financing terms for the vehicle. Most dealers want to lump it all together because in the loan contract they will mask quite a bit of the actual price of the car, and generally they will only try to reach a monthly payment figure that you can live with instead of sharing all the loan details.
So, before you ever visit the dealer lot, your work should actually start. Try to decide in advance, either online or locally, what vehicle(s) you are interested in purchasing and become acquainted with the average cost for that vehicle. Then make sure that your budget is going to suit. Most financial experts recommend that more than 10% of your monthly income should not be spent on car expenses, including loans, petrol, maintenance, insurance, etc.
You need to find out what the loan will cost, so visit some car loan websites and/or local banks, and apply for an auto loan, because you now know the price you want to pay. See what rates and conditions they’re giving you. Your credit history will decide a big part of it. If you are able to get a loan pre-approved, all the better.
Experts also suggest that as a down payment on the purchase of the vehicle, you aim to put at least 20 percent of the car price on the loan, either in cash or in the commercial equity of your current vehicle. About why? Yeah, these days, too many individuals are being placed into loans with longer and longer payback periods with no down payment, and the net effect is that if they try to trade that car in within the first year or so, they find that they will potentially owe more than it is really worth on the car. Using rational financial options in advance will also avoid this from occurring.
Now, using all this data, the price you’re willing to pay for the vehicle you want, the average loan you can get, and the best conditions you can get that fit your budget, you’re now ready to visit the dealer, find the vehicle you’ve been dreaming about, and get the offer that suits your needs. Remember to first negotiate the car price without financing. You will then announce what lending conditions you have already learned after you agree on the purchase price to see if they can beat it.
Get the specifics in prose, too. What’s the cost of a new vehicle? If you have one, what is the commercial number for your old vehicle? What is the APR, the total sum financed, the total amount paid at the end of the loan, the total number of installments and the monthly payment figure itself, when you finance through the dealer? If the dealer is not going to offer this straightforward, succinct data, leave and go to buy somewhere else. If they are willing to compete with your prearranged conditions for the loan, then nice. Have your car loan elsewhere, if not.
A cautionary term. Keep it to business. Buying a new car is exciting and it’s also tempting to get carried away and purchase more cars than you need or desired before, only because it looks so amazing or has so many amenities that the dealer can try to persuade you that you can’t survive without it. In these deals, having predetermined what car you want and the price you’re willing to pay can keep you safe, but only if you hold to your guns and don’t give up.
Using these techniques keeps you in charge of the negotiating process and keeps you updated all along the way so that you can be sure that the offer you wanted is indeed the car and the auto loan you buy.