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Did You Know Car Financing is Negotiable?

Whenever one of my friends buys a new car, I always ask them what interest rate they got on their car financing. And it always surprises me how little effort they put into finding a competitive rate. It’s often a percent or two above the best rates available at the time. They devote time and effort to researching car prices, driving around to several dealerships, and trying to drive a hard bargain with salesmen. But once they get what they believe is a good price, they put down their guard and consider the deal done. When they walk into the Finance office, they just take whatever rate the Finance Manager offers them.

What most people don’t realize is that shaving off a couple of percentage points of interest can make a huge difference and car financing is negotiable.

For example, a $15,000 loan with a rate of 7.5% paid over 5 years results in a monthly payment of $300. That same loan with a rate of 9.5% would have monthly payments of $315 – a cost of $900 over the life of the loan.

So how can you get competitive car financing?

First off, there is nothing that says you have to get car financing from the dealership. It pays to shop for rates before buying a car. Check with your bank, credit union, or on the Internet for good rates. You can get pre-approved for a loan and get a blank lender check (up to a predetermined amount) to pay for a vehicle. Take this check or documentation of a rate quote with you to the dealership when you are ready to buy.

Once you get to the Finance office at the dealership, ask the Finance Manager for his best rate. If he gives you a rate that’s higher than your online quote, show him the quote and give him a chance to beat it.

Most people don’t realize that car financing is negotiable!

Loans are a big source of margin for dealerships and they will often try to win your business. Don’t be surprised if they are able to beat your best quote. But if the Finance Manager is unable or unwilling to beat or match your outside lending quote then just use the pre-approved blank check to pay for the car.


Don’t assume the price of a car is the only aspect of a car purchase that is negotiable, so is car financing and even an extended warranty. Heck get them to throw in some new tires or other perks too. Get competitive offers before going to the dealership and see if the Finance Manager will beat them. Check out the rest of our website if you want more car financing tips or cheap auto insurance quotes because that’s definitely another department you can save a lot of money.

8 thoughts on “Did You Know Car Financing is Negotiable?”

  1. arm-and-leg-safe

    I totally agree. I actually got my car through my credit union. I already had a relationship with them so the whole transaction was painless. I got my approval and paperwork done in a couple of hours, then maybe a few hours getting a PO from the dealer and finally, another 30 minutes to an hour to get the check from the bank.

  2. MikeS

    Probably will have to finance part of the next car and will absolutely shop around. After that, I hope to be paying cash for all cars from then on and hopefully not need financing anymore.

  3. Julie

    BFS, sorry to hear about your car. We bought a van last year in cash. If we need to buy another car, it will be in cash, too. I think having a car replacement line is important in everyone’s budget.

  4. BFS

    arm-and-leg-safe, I loved the credit union I was a member of growing up. I should have kept the account.

    MikeS, since my car is a 2005 Aveo with 43,000 miles and hubby’s car is a 2007 Prius with 60,000 miles, I thought we’d be buying our next car in cash too.

    But my car just overheated today and had to be towed to my mechanic. If the bill is too high, I might be in the market pretty dang quickly!

    I can’t believe that a car with less than 45,000 miles could have to get a new belt, new 02 sensor, and now whatever this is all in the last year. Guess where our tax refund is going…

    Positive side, in the next few weeks, I’ll probably have a blog on how to handle yourself during a car crisis…gory prices and all…

  5. MikeS

    BFS, that’s a bummer. My plans are contingent on the cars lasting for as long as possible. I’ve got a car fund line in the budget, just need to get it built up.

    Just had to spend some money on my car, new tires and a radiator problem. Thankfully, there was bonus money left over to take care of it, total bill was about $1300.

  6. BFS

    Thanks Julie and MikeS. Luckily it was “just” a broken thermostat housing and “only” will cost $343 with tax and everything. I’ll pick the piece of sh…the car up tomorrow. 😉

    I’m still going to write a post right after I see if Chevy answers the email I sent to their customer care department today…

  7. BFS

    Oh, and Julie, I agree about needing a car replacement/maintenance fund. We have one too, it’s just not big enough yet to buy a car. Luckily it is very much enough to cover this cost and new tires though (it’s at around $5000). It should be large enough for a new-to-us car within the next year…I’m looking into the Hyundai Accent, Toyota Yaris, or even a used Prius…

  8. Car loan Perth

    Hi! You have a very informative posts. Thank you for sharing and two thumb-up okay!

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