How to Negotiate a Car Price If Financing

Buying a car can be intimidating if you are not prepared. According to the National Automobile Dealers Association, the average purchase price of a new car at the time of publication is $28,400. It is the second largest consumer purchase most people will make, next to a personal residence. Purchasing a car involves up to three separate transactions--the purchase, the trade-in and the financing. While each of these transactions should be handled separately to ensure the best deal possible, it is especially true concerning the financing.

Instructions

1

Determine the exact car you want. Do all of your test driving and research before you begin to negotiate price. Let the salespeople who approach you know you are just researching but will be making a decision soon. Check with magazines and websites and read consumer reviews about the cars you are interested in. This information should also give you a retail price, and you should be able to find the price the dealer paid for the car.

2

Shop for financing with several lending institutions. Compare interest rates for new or used car purchases over different repayment terms. Tell each institution the down payment you will be paying and the approximate price of the car. Each can quote you an interest rate as well as a monthly payment based on that information. Ask for the total interest you will pay on each loan. When you have negotiated your best deal, ask the lender to write it down for you. See if you can be pre-approved for the loan to make shopping easier.

3

Negotiate the purchase price of the vehicle, without consideration for monthly payments. If you are trading in a vehicle, you can negotiate your trade-in price separately, but it might make it easier for the dealer to conceal what you are actually paying for the car. Buyers can become distracted by a high trade-in allowance. There is no difference between paying $20,000 for a new car with a $5,000 trade-in and paying $25,000 for the same car with a $10,000 trade-in. You will be paying $15,000 for the vehicle and giving up your vehicle in both cases; they are identical deals.

4

Ask the dealer to put his best price in writing. Shop with at least two other dealers on the same car with the same equipment. If the cars at other dealers have different options, make sure you either add or subtract the value from the appropriate deal to compare who has the best deal.

5

Go back to the lowest priced dealer and tell him you are ready to buy today but you need a better price. Depending on how good the deal was the first time, you may be able to negotiate a bit more off the price.

6

Ask the salesperson to give you a quote on the financing when you have negotiated a satisfactory price. He will have to run your credit application, but should be able to deliver a quote quickly. If the quote is lower than what you received from the private lender, go ahead and close the deal with the dealership. If not, tell the dealer the quote that you received from the lender, and give it an opportunity to do better. If the dealer gives you a better deal, you have saved more money. If the dealer matches the loan offer from the private lender, it may be quicker and easier to close the sale right at the dealer even if you do not save money.