Most car buyers anticipate having to negotiate the price of a car, but they may not expect to negotiate the terms of their auto financing. In reality, almost all of the terms of the car loan are negotiable. Coming into the negotiation with the proper information can help you save you a substantial amount of money.
Come With Quotes
Before you negotiate a loan, get quotes from other lenders. Shop for financing before you start shopping for your car. Get some quotes on paper. When you negotiate after you choose your car, you will have some ammunition. If you have quotes for lower interest rates, you can use these to your advantage.
Watch for Extra Charges
You will usually be offered several extras. These extras may seem attractive at the time, but they can significantly add to the price of your car and your monthly payment. For example, most dealers will offer you an extended warranty on top of the one that comes from the manufacturer. An extended warranty is usually not worth the price, so you should probably pass on the offer. Try to avoid add-ins that cost you money.
Gap Insurance
Gap insurance is a product that the dealer may offer when you finance your car. This product has some value, even though it may seem like an add-in. Gap insurance helps pay the difference between your car's value and how much you owe against it if you are in a wreck. This way you will not owe more than your car is worth if you total your vehicle.
Watch the Fine Print
Read the fine print before agreeing to any terms. You can often find terms that you may not be comfortable with. For example, see if the loan has any prepayment penalties. If so, you would be penalized if you paid off the loan early. Some loans carry interest rate increases if you do not make your monthly payment on time. Read through the contract thoroughly and make sure that you agree to all of the terms before moving forward. If you do not like any of the terms, do not hesitate to ask for their removal.
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