In the previous part, we learnt how you could find the best rate for auto loan by lining up a lender. Besides that, we also saw how to make a choice between low cost financing and rebate. It is not just about your preferences. It is more about the market conditions. The only way to make a wise decision is to do your own calculations based on the related market figures.
In this last part, I will explain how to settle on a price that you are willing to pay. With that over with, we will move on to the last step where we will make a final offer and try to get the best deal.
Step V: Figure Out The Price That You Are Willing To Pay
Since you are a smart consumer, you definitely want to settle on a price that is less than the amount that an average consumer is willing to pay. So, the magic formula for you is that you have to come up with a price that falls somewhere between the average transaction price and the invoice price.
For example, if in your case, the average transaction price is $23,800 and the invoice price is $23,000, then, your objective should be to pay somewhere around $23,300 to $23,500. Please note that this figure should not include any rebates. If you have an option for a rebate and you decide to opt for it (see step IV), you should not take that scenario into account at this stage.
It is not wise at all to talk about rebate while you are negotiating the deal. Instead, you should first negotiate the deal and then talk about rebate. This way, you can easily get the amount of the rebate deducted from the final negotiated price. So, at this stage, you must know all about your finances, including the following:
• How much are you willing to pay?
• How much is the auto loan going to cost to you?
• How much can you afford to put forward as a down payment?
• How much will you have to finance?
Step V, however, is a two-part process. You have just been through with the first part. The second part is to use an advanced auto loan calculator (such as the one at my website) and figure out the amount of monthly payment that you are expected to pay. If that seems affordable, this is the time to move on to the final step.
Negotiate The Deal
If you want to have the max leverage, you should contact the salespeople at the “right” time. For example, you can contact them on Friday, just an hour before the closing. This is the moment when people are busy planning for the weekend.
Another good strategy is to show up at the end of the month. This is the time when the dealerships do a lot of brainstorming to meet its budget for revenue and profits. If you strike at the right time, you get an edge in the negotiations. Tell them that you want to buy the car right now. At this point of time, the salesperson is likely to consult with the sales manager and come back with an offer that’s well below the sticker price. Don’t accept it. Tell them the amount that you are willing to pay – the price you decided on in step V. Don’t raise the offer, no matter how hard they try. If they accept your offer, you have just clinched the best deal. If they don’t, you should end the negotiations graciously. And try another dealer.
After visiting several dealers, you will definitely find one that is ready to accept your offer. So, as you can see, when it comes to getting the best auto loan, a savvy negotiation strategy is the key. You can visit my website for more resources on car loans.