Buying a new or used car is always an exciting experience. However, the truth is that sometimes this experience can be intimidating, especially if you have to negotiate with a lender. There is much to learn about car payment, as you need to know your financing options and which suits you best.
Some bad car dealerships might try to get their hands on your hard-earned money by preying on the complexity of the whole car-buying process. But don’t worry! To help you avoid falling into that trap, we compiled the following best practices for negotiating car loan terms and conditions in Canada.
Ensure Your Loan Term is Short
The first tip when arranging auto financing is to pick the most affordable and shortest-term loan. It is essential to note that you may experience higher interest rates if you let your loan term run for a more extended period. Negotiating for a loan term that goes on for a short period of time ensures you avoid money wastage. Remember that any wasted cash adds up to the automobile’s total cost.
Negotiate the Price and the Payments
Unfortunately, many car buyers forget to negotiate the price of the new or used vehicle and focus too much on the monthly payments. That mostly happens because many dealership agents often try to discuss lower monthly payments with their clients. But here is the disclaimer!
Although a lower monthly rate can be reasonable, the borrower must be ready for an extended repayment term and, in turn, a higher APR. Therefore, we recommend working with a salesperson who will not only lead you toward negotiating your monthly installments but also the actual car price.
Skip the Extras
Some services like fabric and paint protection are crucial when purchasing a new vehicle. But when it comes to a used vehicle, some extra services like rustproofing, car alarms, etc., that your car dealer tries to sell to you may never be worth the investment. Instead, enquire for dealer offers which help in cost reduction.
Pick a High Down Payment
The reasoning behind paying a significant portion of the price of the car as a down payment is to lower the buyer’s overall loan rate. Therefore, if the money is available to you, loan calculators can help you figure out the most significant downpayment possible that you should put down to reduce the total amount. After that, negotiating a short-term auto loan can follow.
In conclusion, whether you have bad credit or good credit doesn’t matter. If you take the above simple guide on negotiating an auto loan seriously, you will enjoy an extended warranty and lower interest rates, among other benefits. The bottom line is arming yourself with the necessary tools to approach financial institutions, engage them and negotiate the best loan repayment terms.
Contact DriveNation, and our Canadian experts will offer real-time solutions to your new car needs.
