6 Tips to Negotiate on a Car Loan

If you want to buy a car, but don’t have cash, you can always apply for a car dealer financing. But you should be prepared for a never-ending sales pitch from the salesman and the finance manager.

tips to get approved

Speaking of preparation, here are six tips that can help you significantly:

1. Don’t Make Decisions Based on Your Emotions

A lot of emotions can be involved in buying a car. You may find it difficult to leave the car once you’ve gone out for a test drive. But if the dealer is not interested in negotiating, you are free to walk away. Bear in mind that you’re the one paying for the car and you’re not doing any favor to the dealer. If you allow your feelings to get it, you might make a bad decision, which you will regret for years to come.

2. Don’t Take on Loans with a High-Interest Rate

If you have an excellent credit rating, you can get single digit annual performance rate (APR) loans. But an average credit rating will get you loan at 12% APR, while a bad credit rating will get you loans at 15% APR. Regardless of your credit situation, do not take a loan with very high-interest rates. It is not worth to pay exorbitant interest rates to own a car.

3. Never Take A Car Loan That Exceeds 60 Months

Nowadays, you can finance auto loans for up to 7 years. Since a car is a depreciating asset and loses value every year, this repayment period is ridiculous. If you can get a loan term between four and five years, that’s ideal. However, you should never take a car loan that exceeds 60 months. Otherwise, this can quickly turn into an upside-down car loan for you.

Be careful with long car loan repayment terms

4. You Don’t Need Every Option You Are Being Offered

Dealer will try to sell you all options available. These options include car alarms, paint protection, extended warranties, fabric protection, rustproofing and even gap insurance. While many of these items are useful, the dealer markup on them are way too high. You can get cheaper car alarms and extended warranties from the aftermarket. Most modern cars do not even need rustproofing, and for paint protection, you can apply Scotchgaurd. For insurance, most credit unions will sell you gap insurance at a price much lower than that of the dealer.

5. No Price Is the Final Price

Payment negotiation is one of the popular trick car salesmen use. They may ask questions such as “how much can you afford to pay per month?” as they intend to set the price of the car based on the maximum monthly payments you can afford. If they entrap you in this trick, you will end up paying way more than the actual price of the car. The solution? Don’t negotiate car payments, negotiate car price.

6. Read All Documents Thoroughly

Do this before you sign anything at all. Thus, you can be sure there has been no additions to the terms. It is best to take help of a friend or family member to join you in checking all the documents to ensure you don’t miss out on anything.


Now you know how to negotiate a car loan comfortably. However, before I leave you to start taking action, let me repeat a very important tip: you can always walk away from a deal. Go ahead, check out various car loans and use these tips during your negotiation.


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