Using Dealer Financing to Negotiate Car Prices

Financing a car at a dealership can often be an intimidating task, yet some people take on the challenge of negotiating with a dealer to get a better price than those offered by a lending company. We all know that dealers have bad reputations for adding fees and hiking up interest rates. But if you walk into the dealership armed with knowledge and a little confidence, you can walk out a happy vehicle owner.

Educate yourself before going in. Probably one of the best ways to ensure that you’re going to have the best experience possible when negotiating with a dealer is by learning everything there is to know about the vehicles you’re interested in. This means, checking the Kelly Bluebook values, researching loan fees and interest rates based on your specific credit score, checking for manufacturer deals, and even practicing your haggling skills. This way, the dealer can’t surprise you with any information you don’t know.

Take advantage of interest rate deals and cash back incentives. While financial institutions, especially online, very often offer lower interest rates, sometimes you can catch deals at dealerships that can save you a lot of money. For instance, sometimes you can get a 0% APR deal for the life of the loan. Or you might get a $5,000 cash-back incentive. These deals can save tons of money and often make it worth working with a dealer.

Question penalties and additional fees throughout the contract. When financing a car, it’s very important to ensure you’re not being charged any hidden fees. This means, you’ll want to really study the contract for any penalties or additional charges they don’t mention. Also, you’ll want to watch out for the statement “subject to financing,” which basically means they can try to adjust your interest rate after you leave due to the finance company’s decision that your credit score is too low.

Negotiate up from the invoice price. Another strategy that can only be used at the dealership is negotiating up from the invoice price. The invoice price is the amount that the dealer is paying the manufacturer. If you really want a good deal on your vehicle, using this strategy along with having a larger down payment might just give you the price you want. 

While lending companies often provide lower rates than dealerships, they can’t be negotiated with. So if you’re looking for a way to get a lower price when financing a car, try educating yourself and negotiating the smart way with a dealer.