Put Up Your Dukes – Time to Negotiate a Car Loan

carRedIt’s so exciting, you’re finally replacing your old car, you’ve done the research, taken a few test drives and maybe even have a dealership in mind, so what’s stopping you?  If you’re like me you’re intimidated by the song and dance you’ll have to do in order to complete the purchase.

Buying a car whether brand new or used is one of the most excruciating exercises in a person’s financial life. Getting a mortgage is easier, faster and less paperwork than the all-day experience that many dealerships put their buyers through.

The Dance

The first step after choosing the car is the negotiation of the price. The salesman will always play the role of the guy on your side and his manager will always play the role of the guy in charge that he has to convince to give you the deal you want. At least that is the script that 99% of the dealerships follow. These days the finance guy will also be part of this dance as you negotiate a monthly payment – but wait did I say monthly payment? Yes the latest in car buying is the salesman will try to steer you away from the total price you are paying for the car and guide you towards negotiating an amount you can afford to pay on a monthly basis.  Maybe you can afford $300 a month but why should you pay that much if you only need to pay $250 a month. By allowing the sales person to distract you with a monthly amount you may be buying more car than you really want. Don’t get distracted with this maneuver; always negotiate the total price first.

The Fight

Okay, you have the price and you are ready to talk to finance about the car loan. This can be where the real struggle begins as you are held hostage over extended warranties, tire plans, maintenance plans and upgrades galore.  The helpful finance person will want to explain every plan in detail and will want your initials for each one you refuse.  Like the sales person, finance will leverage the manager to try and get you to add some of these plans on to your loan. Additionally if your salesperson conveniently forgot to mention the dealer fees, this is the place that you will have to put up a fight to get those extra fees removed. Again, just like your salesperson, the finance person will be running back and forth to the manager to plead your case. It would be funny, all these people running back and forth to the manager’s office, if it didn’t take up so much of your time!

Kiss and Make Up

Finally, everything is agreed on, you’re ready to ink the deal. Make sure that you read your loan documents carefully, take out your phone use the calculator and add everything up, check and double check that what you understood in the negotiations is what is on the piece of paper or papers that you are signing. It’s easy enough to have misunderstandings; the last thing you want is to have is a misunderstanding that results in a higher payment for the next 36 – 72 months!



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