5 Tips on How to Negotiate a Car Loan

Cars nowadays have become an essential part of modern lifestyle. However, the price tags they come with may not always be affordable for people coming from diverse economical backgrounds. Therefore afford to shell out whole amount at one go. This is where auto financing comes in.

There are two types of financing which one must keep in mind:
DIRECT LENDING: In this case the loan is directly given by the bank, credit union or finance companies.  It has to be repaid over a period of time along with the interest amount and financing charge.
DEALERSHIP FINANCING: This type of procedure involves a contract with the dealer, which reads that one is expected to pay the entire amount, over a period of time. Installments of a fixed amount of cash are to be paid at regular intervals.
Before signing up for a loan it is important to negotiate the deal with your agent. Few tips on how to negotiate an auto loan are stated below:
Negotiation should be done on the price and not on the car payments. Salesmen are usually very tactful professionals. They may ask you the amount you are willing to pay per month. This may seem that the salesman is friendly towards you but if you fall for the trick, you will end up paying a greater amount. These are the things one needs to keep in mind while negotiating with the agent. You can also quote your price and leave. The will definitely call back if they are willing to go ahead with your offer.
The term should be kept as short as possible. Nowadays one is allowed to repay a car loan for up to 7 years. You may think this to be advantageous but always remember the companies are not there to look out for your comfort. The value of car decreases with each passing day so by extending your term you end up paying more. Do not keep the term more than 60 months.
Be determined not to fall for the extra benefits being offered to you by the finance manager. These may include car alarms, warranty extensions, rust proofing etc. These may be good investments but the companies earn huge profits from them as well. You will get these products at a cheaper rate from the market.
Your credit rating decides your interest rate. If you don’t get loans from any banks, credit union or other finance companies, you will be considered to be having low rating and your interest rate will be high. Nevertheless even if your rating is not high, don’t pay absurdly high rates; instead, bargain with the rates.
Buying a personal car is not only a financial decision but also an emotional one. One needs to show practicality while dealing with the financial part. If the interest rate is high and if you think it will be difficult for you to repay the amount just walk away. There are many other dealers in the market who might offer you what you desire.
These are the basic tricks of negotiation one needs to make a note of before signing on the dotted line.