Can I Negotiate My Car Loan?

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Even with poor credit.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - May 20, 2020

When you're dealing with bad credit, items like auto loans become more expensive. There are a few ways you can negotiate on your car loan. Let's go over why your auto loan may be more expensive than you'd like, and what you can do to lower the cost.

Why Is My Car Loan So Expensive?

The price you see on a car's window sticker is just the jumping-off point when it comes to how much you're going to pay. Your auto loan includes a few items that aren't on the list, such as tax, title, and license fees, documentation fees, and interest expenses.

If you have poor credit, you're likely facing a higher interest rate than someone with good credit. This means it's important to set a budget, and to focus on the overall cost of the loan, not just the monthly payment you want.

The good news is that you don't have to just take the price as it comes. Typically, you can negotiate with a dealer and/or lender to get a more desirable deal – though this can be more difficult with poor credit.

What You Can Negotiate on an Auto Loan

There are typically a few things you have power to negotiate over, even as a bad credit borrower. Remember, you have the final say when it comes to the car you're purchasing. Never take a deal you feel pressured into, and don't finance a vehicle you're not completely satisfied with.

These are items that may not be set in stone:

  • The price of the car – The price on the window sticker of a new car is called an MSRP, and it stands for manufacturer's suggested retail price. This price is something that you may have some wiggle room on. Just remember to start low when you talk to the dealer, and don't give away your maximum price limit. When you start low, it’s easier to move up to an agreeable negotiated selling price, rather than trying to negotiate down to a lower price.
  • Interest rate – Though interest rates are typically negotiable, people with poor credit typically aren’t going to qualify for the lowest interest rate available. The best way to negotiate an interest rate is to understand your credit situation. Make sure you check your credit score and reports, and research the interest rates online that borrowers in your credit score range qualify for before heading to the dealership. This way, you know if a lender is offering an unrealistic interest rate for someone in your situation. Be aware, however, that interest rates are tied to a credit tier that’s set by the lender based on your credit situation and a few other factors.
  • Value of trade-in– If you plan on using a trade-in as a down payment, the amount you get for it can usually be negotiated. The actual cash value of your vehicle depends on what a dealer is willing to offer you, but again, doing research beforehand can give you a good platform for negotiation. Visit online valuation sights like KBB.com and NADAguides.com to get an estimated value for your car. Be honest when entering information about your vehicle for the most accurate estimate.
  • Dealership add-ons – There are generally a number of fees and charges that can raise the cost of a car without you even noticing. Be sure to check the paperwork and go over all the fees carefully before you sign an auto loan contract. Some things, such as an extended warranty, optional items like cargo nets, floor mats, and roof racks, and GAP insurance don't have to be purchased. Also know that dealers charge a documentation fee, or "doc fee," for filing the paperwork for your loan. In some cases, this can be a few hundred dollars that you weren't expecting to shell out. Doc fees vary by dealership.

Some Things Can't Be Negotiated

We mentioned that some of the additional costs of an auto loan are tax, title, and license fees. These are items that can't be negotiated. Here's a breakdown of the non-negotiable fees:

  • Sales tax – Most states charge sales tax on cars, but the cost varies from state to state. The tax can differ from the sales tax you pay on other items, and a few states don't charge sales tax on vehicles.
  • Title fees – This is the charge from your state for issuing a car title. The fee varies in each state, some charge under $10 for a title, while others charge hundreds of dollars.
  • License and registration fees – These fees also vary by state. Not only does the cost differ, but the way a state determines the license fees varies, as well. Some states charge an annual registration fee, while others don't make you renew each year; some determine cost by vehicle weight, others by sales price, while some charge a flat fee.

Ready for a Car Loan?

Now that you know you can negotiate your auto loan, it's time to find a dealership. Here at CarsDirect, we work with a nationwide network of special finance dealers that are teamed up with lenders who know how to help.

Whether your credit is good, bad, or ugly, we want to get you on the right path toward financing your next car. Our process is free, and there's never any obligation to buy. Fill out our auto loan request form to get started today!

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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