Auto Loan - How to Drive a Hard Bargain

Taking an auto-loan these days are not much of a matter. However, even in case of an easily available auto loan, one can end up paying a lot more than he should have. So bargaining becomes essential as usually is the case for many other things. A complete control of the bargaining process needs to be in the hands of the buyer. Here are a few tips to handle the bargaining process confidently:

Get pre-approved.

Avoid hassles over financing and focus on prices and rebates by getting your loan pre-approved.

? Tell the loan counselor the type of vehicle you want and the amount you want to borrow. Remember that tax, title and tags will add to the price, so factor those costs in.

? When your loan is approved, you'll probably get a "not to exceed" draft that you can use just like cash when you go car shopping. The draft is good for up to 60 days.

Before taking the loan or going in for the bargain a complete knowledge of the auto loan terms is a must. This will help you understand all the statements and offers clearly and remove any tricky and hidden costs from your bargain.

Negotiate the purchase price

The "sticker price, " otherwise known as the Manufacturer's Suggested Retail Price (MSRP), is not what the dealer paid for the car. Ask to see the invoice price-the cost to the dealer when the car is delivered to the lot. The final cost to the dealer is normally even less than the invoice amounting. That's because the dealer gets rebates from the manufacturer of 2% to 3% of the invoice price. Never negotiate down from the MSRP. Always negotiate up from the invoice price. Dealer options-extended warranties; undercoating, rust proofing, upholstery and paint protection; insurance; add-ons; and fees for tags, title and taxes-all add to the price. They're high-profit items for the dealer, and their prices are negotiable.
Most new cars today don't need undercoating or rust proofing. Extra warranty insurance is usually less expensive if bought from an insurance company rather than the dealer. If at any time you feel pressured, hurried or confused-leave.

Get it in writing

Make your final offer and state that the price includes all of the agreed-upon items. Get it in writing. Now ask if there are any rebates in effect. After you and the salesperson have agreed on the price, only then should you mention your trade-in.

The trade-in: Do it last

? Determine the real wholesale value of your car in advance. The "Book Price" is an average for trade-in and resale values.

? Clean up your car; drive it to three or four used car dealers; ask them what they'll pay you for it. Check average figures in the National Automobile Dealers Association (NADA) Official Used Car Guide.

? Don't talk trade-in when you are negotiating the purchase price of the new car. Only after you've reached an agreement on price should you ask the dealer what he'll give you for your trade.

These factors not only help to have complete control over the auto loan bargain but also make the entire process smooth and free of any misunderstandings.