Today we have a guest post from the Car Negotiation Coach offering advice on car financing. The Coach’s blog provides people with practical negotiation strategies and financial advice on car purchases.

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.

Summary

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 warranties. Get competitive offers before going to the dealership and see if the Finance Manager will beat them. Check out my website if you want more car financing tips.