Negotiating Bad Credit Car Financing in South Florida
What a long, intimidating word for most car buyers. Thinking about what you’re going to do when you start the car buying process can be daunting. This article will help give you some pointers on how to successfully get that car with the best deal possible.
When car salesman negotiates car deals every day, you can feel as if you’re at a major disadvantage when you want a discount and the dealer just won’t budge on the price or the payments. These tips will help you have an edge when negotiating a car purchase, and especially when buying a car with subprime credit.
Get Approved First
Rather than driving from one dealership to the next, test driving cars with no idea if you can get approved or not, get your financing approved first.
This is usually not the way cars are bought when you have bad credit. Most of the time, car dealerships expect to show you a car or two, have you fill out a credit application and then tell you what you can and can’t get approved for.
It’s a frustrating experience for many people.
Even worse is spending time at a car dealership getting your hopes up for a particular vehicle only to be told you can’t get approved, or the payments are going to just be too high for your budget.
The best thing to do is to get your financing approved in advance.
Did you know there are companies, some on-line, that specialize in helping people with sub prime credit to get approved for auto loans?
Getting your financing approved before you shop for your next vehicle offers significant advantages.
- You won’t have to waste your time looking at or test driving vehicles that you can’t get approved for or that are not in your budget.
- You can choose the vehicle you want based on a set amount. This allows you to better narrow down your search for the best vehicle for you, easier.
- When you’re already pre-approved, you’re in a better position to negotiate the price.
- You’ll already have an idea of the interest rate you can expect.
- What’s better than knowing you’re already approved?
Negotiating Price
Most all dealerships offer you an initial price higher than they will accept. This is to raise your expectations of how much you’ll have to pay. When they lower the price from their initial offer, you have the illusion of a discount. They allow you to feel as if you’ve “won” and when you accept the lower price, thinking you’ve got a discount – you’re really only accepting what they wanted you to pay to begin with.
You can use an online auto loan calculator to determine what your monthly payment will be with your down payment, trade in, and interest rate. This is good to use so you have a ballpark figure on what you are looking to spend each month and how much you need to put down to bring the payment down to the amount you can afford each month.
You can turn this around.
Make a Low Counter Offer
Usually when buying a car, the price is negotiated first and the financing arranged second. With your financing already pre-approved, you’re now in the position to make a true offer as a buyer. Don’t ask for a lower price. Tell the dealership what you would be willing to pay, and when you do make a counter offer, offer a price $1500 – $2000 less than the price you would like to pay.
Remember, regardless of what you offer to pay – the dealer is always going to try to “bump” you.
This is industry lingo for trying to get you to agree to just a bit more than you are wanting to pay. So use this to your advantage by always offering a good bit less than you expect the final price to be. Most dealerships don’t expect car buyers to do this and this will allow you to see just how low the dealer will go.
Then when you concede from your offer, you’re getting a better price than what you would have, had you not asked for such a substantial discount.
Auto lenders at financial institutions will usually offer you loan terms easily with good credit, however if you have bad credit or poor credit and need to build your credit back up or improve your credit your monthly payments will usually be higher due to the higher risk.
If your Fico score is below a 640 than you would be considered subprime auto financing. These will come with higher interest rates from online lenders or banks and credit unions. Check your credit history to see if there are anything you can dispute or pay off to help bring your score back up.
There are plenty of resources to help you such as credit karma and others. Also look at 84 month loans which usually take longer to pay off but will yield lower monthly payments.
Be Prepared to Walk Away
When you’ve already arranged your financing, know what you can get approved for, and have made an offer on a vehicle… be prepared to walk away.
Once a salesman has invested his time in showing you a vehicle, taking you on a test drive, and negotiating figures, you have a negotiating advantage.
If you’re willing to walk away from a higher price than you’re willing to pay, the salesman will want to do whatever he can to make the time he’s invested with you worthwhile. Just a simple gesture of standing up and saying you’re going to have to think a bit more about their offer will most likely result in the salesman asking you to stay to reconsider.
If the salesman doesn’t try to make the numbers more attractive at this point, he doesn’t want to sell a car.
Most every time, by simply standing up and saying you want to think this over for a while, the salesman will do whatever they can to complete a sale.
So don’t agree to any price or payments before you’ve seen what the dealership will do to earn your business. Being willing to walk away from a “deal” will not only help you to save money when buying a car with bad credit, it’s also a smart attitude to have. You’re the buyer and they want to sell a vehicle more than you want to buy one. Use this to your advantage when negotiating and you’ll get a much better deal on your next vehicle.
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