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.

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Is It Safe to Use a Home Equity Loan to Buy a New Car?

Twenty-four percent of homeowners used a home equity loan -- line of credit secured by real estate -- in a 2006 survey by Synergistics Research Corporation. Buying a car using funds from a home equity loan might save thousands in finance charges, but the borrower could lose his car and home if he defaults. Overall, a regular auto is usually the way to go.

Identification

Home equity loans (HELs) are a lump sum of money usually at a fixed rate and set repayment schedule that a borrower gets by using his home as leverage. This is not the same as a home equity line of credit, which has a variable rate and offers interest-only payments. If the borrower defaults on the HEL, he can lose his house should the creditor sue for the debt. At the very least, the lender can prevent the sale or transfer of the home.

Disadvantages

Since property secures the HEL, lenders usually offer lower rates than one would find on a car loan. However, most HELs have a 10-year repayment plan, so the borrower could pay more with a lower interest rate because of the long life of the loan. Most car loans last three to five years. Also, this type loan often has a higher origination fee than a car loan.

Benefits

The longer life of the HEL usually means lower monthly payments than on an auto loan, and if the borrower repays the loan early, he can avoid the extra finance charges. The borrower may also qualify to deduct the interest on the loan. How much the mortgage interest deduction saves depends on the borrower's tax bracket. With an HEL at 6 percent and a borrower in the 25 percent tax bracket, for example, the effective tax rate is 4.5 percent. Taking out an HEL does not automatically qualify a taxpayer for a deduction. Renting out a home, for example, could disqualify one from using the deduction.

Tip

Consumers should always consult a professional if they plan to use the mortgage interest rate deduction to lower the cost of a car loan. In general, however, car loans are usually the cheapest way to finance a car, according to financial expert Don Taylor of Bankrate.com. However, consumers should calculate the cost of all options. Some websites, such as LotPro.com, have calculators comparing the cost of a car loan versus a home equity loan.

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Laws on Title Loan Repossession in Nevada

In exchange for the loan, a borrower uses his car title as collateral with a title loan lender. Although title loan practices are legal in many states, some have enacted consumer protection laws governing lending practices of title loan lenders and the steps lenders must take when borrowers default on their loans. Generally, upon default, a lender can repossess his collateral. In Nevada, the Nevada Revised Statutes and Nevada Code govern title lending practices.

Sole Remedy

Under Nevada law, a title loan lender's sole remedy when a borrower defaults on his loan is to repossess or reclaim his collateral. The lender cannot pursue civil legal liability for repayment unless the borrower conducted fraud or intentionally damages his vehicle to avoid repossession. If there is no fraud, concealment or intentional waste, the lender's exclusive remedy is to pursue repossession.

Vehicle Fraud and Waste

Title loan lenders can sue borrowers for defaulting on their loans or loan repayment extensions in egregious situations. If a borrower intentionally tried to conceal his vehicle to evade repossession, the lender can sue him for fraud. If a borrower intentionally damaged or neglected his vehicle, the lender can sue her for intentional dissipation or waste. However, the Nevada Code states that it is not considered waste when a borrower continues to drive her vehicle in the same manner before she obtained the loan.

Loan Fraud

Similar to vehicular fraud or waste, a lender can sue a borrower for fraudulently obtaining the loan by providing false information or transferring title to a third party in an effort to avoid repossession. For example, if a borrower transferred title to his brother after he obtained his loan, his title loan lender can sue him for fraud. Lenders can sue borrowers for fraud and collect reasonable attorneys' fees and legal costs. Furthermore, courts may award other equitable remedies, such as damages.

Consumer Rights

Title loan lenders have a legal obligation to post their fees and interest rates in conspicuous places to notify prospective borrowers of the applicable fees. Furthermore, title loan lenders must post their licensing information in conspicuous areas. Generally, title loan lenders cannot charge more than 40 percent of the principal loan amounts as an annual percentage rate. Under Nevada law, title loan lenders are not allowed to make more than one loan to one customer at the same time until the customer pays off any existing loans to that title loan lender. The Nevada Revised Statutes place further prohibitions on title loan lenders who engage in business with military borrowers. If a title loan lender repossesses his collateral, the lender must allow the borrower to reclaim her personal property left in the vehicle.

Considerations

Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.

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Can I Trade in a Car That I Still Have Monthly Payments On?

It is possible to trade in a vehicle that still has an open loan. To determine whether or not doing so benefits you financially, check your vehicle's value and compare it to the car's remaining pay-off amount. If you owe more than the vehicle's loan amount, you may have to carry over money from your old car loan into your new one.

Vehicle's Value

Get an idea of how much your car is worth before bringing it to a dealer for a trade-in appraisal. While Internet appraisal websites differ in value estimates, you can determine an average trade-in value for your car. Use the Kelley Blue Book, Edmunds and NADA Guides websites to obtain a median of values. Most dealers subtract maintenance and repair fees from the trade price, so be sure to expect somewhat of a lower value if your car needs work or has body damage.

Remaining Amount

Your dealership salesperson will call your lender to find out your remaining loan amount, but you should do so beforehand to prepare your budget. If you owe more than the vehicle is worth, it is advisable to put down sufficient money to cover the negative equity so you don't carry over the debt to a new loan. If you lack the funds for a down payment, consider your interest rate. If your current loan has an interest rate of 6 percent and a new loan offers a 0 percent rate, you'd be saving money by transferring a small amount of the balance rather than keeping your car to pay down the loan.

Dealer Process

As stated earlier, the dealership will call your lender to obtain your remaining loan amount and appraise your vehicle. The loan amount and the vehicle's trade value should be close to your calculations. If not, ask your salesperson why the values are off and negotiate a fair price if you do not receive sufficient explanation. Once you make a deal, the dealership pays off the loan; equity goes into your new loan as money down, or if you owe more than the vehicle's value, the excess amount is added to your amount due.

Warning

Be careful of transferring negative equity. In the event you carry over extra money and take out a longer term loan, you may see an attractive monthly payment, but consider the length of the loan and your total payback amount. If your new vehicle has a sticker price of $25,000 and you end up borrowing $29,000, you can expect to stay in that car for a long time. It will take years or extra payments to level your equity and loan amount. To see the full effect a loan term and interest rate has on your loan payback amount, use the Edmunds' website to access the auto loan calculator feature.

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How to Skip Trace for a Repo

When a person skips town and moves to an unknown location to avoid having his vehicle repossessed, it can be difficult to locate the car. Repo men have to be creative, organized and investigative to locate the new address of the person. When running a "skip trace" for a repo, it's important to keep track of all types of information, whether it may seem relevant or not. Knowing whether the person is married or not, where his family lives, and even where he may go to church can give you that final address or car location you need to repossess the vehicle.

Instructions

1

Review the credit bureaus every few days. Any change to his credit history will register here, like a new credit card or a bank card application. A change of address to a credit account will register here. However, this does not mean the skipper is going to register a new address. Still, you should continually check at all three credit bureaus--Experian, Equifax and TransUnion--as information differs.

2

Make a note of when his license is up for renewal and when the tag expires. Search the DMV records to find this information. However, this may not help either, as many skippers will drive on an expired license or use someone else's tags. But keep track of the information and check periodically for changes.

3

Visit the local courthouse. Review court records and check for scheduled court appearance dates. This way you can appear on the date and follow him to the car. Look through the civil list of "process served". A person who is running from the repo man has lots of other people trying to get funds and who are resorting to the legal system. A process serve will have the current address. All you have to do is write it down and go get the car. Look through civil records that will give you information on the subject like attorney names and addresses, and other useful information. These records may not give you the subject's address, but they will give you useful information that can lead to other sources.

4

Research and keep track of important information like Social Security number, marital status, employment records, old friends, girlfriends, hangouts and hobbies. A person usually works within the same industry, or finds similar hobbies and hangouts in new towns. If he has a family, he may go back to see them. Look for the person at family homes during the holidays. Many cars are repossessed on Thanksgiving and Christmas when the skipper visits family homes.

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Is There an Advantage to Paying Off a Car Loan Early?

Car loans act much like mortgages, with several primary differences. Car loans tend to have lower interest rates, except for risky borrowers. The interest paid on a car loan does not fall under any tax exemption status, unlike mortgage interest. But because car loans are for such lower amounts than home loans, borrowers can pay them off more quickly and can often make extra payments to retire the loan early. There are several advantages to paying off an auto loan early.

Interest

Interest payments are much easier to handle if a borrower pays off an auto loan early. The interest rate that is applied to the loan applies only to the principal. If the borrower starts paying off more of that principal, the rate will apply to a smaller and smaller amount, leading to lower interest payments in addition to less principal. All early payment will reduce the total amount of interest the borrower is paying--as long as the borrower is paying interest at all.

Credit

Credit scores are affected by how borrowers deal with their debt. Paying a debt off early is a sign that a borrower is financially responsible and pays loans off easily. This may raise credit scores, and even if it doesn't, a lender can look at a credit report as see the account was paid off early. This makes lenders more willing to loan the borrower money for other things like a mortgage and is an ideal process for building credit or recovering from a bad credit decision.

Financial Planning

The sooner a borrower pays off an auto loan, the sooner they will have extra money to spend on other purchases or paying down other debt. This can be useful if borrowers have an eye on another loan or on saving or investing money in a specific way and need extra income to do it. Paying the car loan off early can be part of a long-term financial plan that includes using the extra money for another project.

Methods

Many lenders are willing to work out different ways to pay off car loans early. Some may be willing to accept large lump sums that pay off the rest of the car loan completely, or at least a good part of it. Others may be willing to have borrowers pay off a greater amount of the principal each month, or simply make extra payments each month. Some lenders, however, will charge fees to have the loan paid off early, since they are losing interest on the deal.

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How to Estimate Car Taxes

Considering that some counties in the United States charge more than 8 percent sales tax on vehicle sales, it is a good idea to figure out your sales tax before making such a large purchase. If buying a car privately, you can expect to pay your state taxes when registering your vehicle, but if buying from a dealership, you'll pay your taxes during the transaction. Learn how to find your state and county's sales tax rate and how to apply it.

Instructions

1

Call your state's motor vehicle office to find out your exact sales tax amount. Have your ZIP code handy to give to the motor vehicle representative in case your state charges different tax amounts by county.

2

Ask the representative if you can deduct a trade-in amount from the sales price of the vehicle before applying tax. If you have a trade-in, you have already paid taxes on it and most states allow you to deduct its trade value for a tax savings. If buying a new car, ask the representative if you can deduct discounts and manufacturer rebates before applying tax---some states require you to pay tax on the full MSRP (manufacturer's suggested retail price) while others consider a price discount, but not manufacturer cash allowances (which look like money down, not a discount).

3

Take the selling price of your vehicle and deduct applicable discounts allowed in your state. This includes subtracting a trade-in amount, if applicable, and new car discounts or rebates, if allowed in your state.

4

Multiply the adjusted selling price by your tax rate. If your calculator does not offer a percentage symbol, use a decimal instead. For example, a $15,000 vehicle with a 8.25 percent tax rate would be multiplied as "15,000 X .0825."

5

Use an auto loan calculator, if you prefer. The Edmunds' website's auto loan calculator offers one free to use that puts in your tax rate by default depending on the ZIP code you enter.

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