Does the thought of going head-to-head in negotiations with a seasoned car finance provider give you sweaty palms and the cold shakes? Some people love it, it’s like an extreme sport they just can’t get enough of. The adrenaline is intoxicating. But those people are few and far between, and for most of us, negotiating your financial future with experts in their field can melt even the most hardened characters. But with a little preparation and some basic tactics for when the time comes for negotiation, you will increase your chances of securing the best car finance rate possible.
Do a little soul searching
To ensure you don’t find yourself stuck with a car loan debt that is too big to handle, you need to look at your own finances and come to some concrete conclusions. How much money do you earn? How much disposable income do you have each month? How much can you realistically afford to pay back on a loan debt each month? This information will be vital when it comes time to make the call and talk to a car finance lender, enter negotiations and submit an application.
Sitting down and running through your finances with a fine toothed comb, and understanding exactly how much money you spend and save each month can be a liberating experience. Not only will it give you clarity on how much money you’ve got at the end of each month to service a car loan debt, it can uncover areas where you might be flushing money down the toilet. Ironing out any money wastage will add more cash to your bottom line that can be used to repay your car loan, or relieve any financial stress you might be feeling.
To get a good idea of what your loan repayments might be like, there are plenty of online car finance calculators you can use. By entering how much money you can afford to repay each month, and how long you’d like to take to pay it back, you’ll get a good idea of how much money you can borrow and how much you’ll eventually pay back. This will be vital information when it comes time to start negotiations, because the last thing you want is to take on a car loan debt you can’t afford, and suffer the financial stress that will inevitably bring.
Clean up your act
Psychologically it can be hard to take when you’re told you don’t qualify for the lowest rate because of factors in your professional and personal life. It’s tough to be told you don’t earn enough money, have a poor employment history, your credit rating stinks, or that the lender doesn’t think you have the capacity to repay the loan. But it can also be the jolt you need to get on track so you can secure the best car finance deal possible in the not too distant future. To make yourself more appealing to a lender, you need to:
• Be in regular employment
• Show an ability to either save money or repay money on a regular basis
• Have assets that you own and have paid off in full
Each of these points will give the car loan provider the confidence to offer you the lowest rate they can. By demonstrating that you have a regular income, can repay loans or save money, and that you’ve done it before, you will be in a position of strength when it comes to negotiating a loan. If you don’t think you can do that, you have two choices. One, you can apply for a loan knowing you will be paying a higher interest rate; or two, you can spend the next 6-12 months saving money from a regular job to build your case for a great rate.
If you have a bad credit rating, you may have to accept that your loan will have a higher interest rate. However, you can fix your credit rating by accepting a loan with a higher interest rate, spend 12 months making all repayments in full and on time, then renegotiate the terms of the loan. You will have demonstrated your ability to repay the loan, so the lender will be more inclined to give you a positive response. If they don’t, then shop around because there will be a lender out there who will take on your debt and offer a better interest rate.
Get your pen and paper and make some notes
It’s time to go to school on the car finance industry and find out as much as you can. You need to find out who has the best rates for the kind of car loan you’re looking for, with terms and conditions that you’re satisfied with. A simple Google search of car finance comparison sites will give you all the information you need. By entering information such as how much you want to borrow, how long you want to pay it back, the state you live in, and whether you want the loan fixed or variable will give you a list of the best car loan providers for your set of circumstances.
With this information you’ll be armed with the ammunition to negotiate the best interest rate possible. Without it you’ll be going into a gunfight with a wet lettuce leaf, and let’s face it, there’s only one winner in that showdown!
Channel your inner Hemsworth and be cool, calm and collected
You’ve sorted out your finances, set a ceiling for how much you can borrow, and done your market research. It’s now time to pick up the phone, dial the numbers and talk to a car finance professional. It should be an enjoyable experience, after all you’re well prepared, but so many people fail at the first hurdle for one simple reason…they let their emotions get in the way.
They let the car loan provider talk them into taking out a loan they can’t afford because they really want the car they’ve got their heart set on. They can’t help themselves, like watching Keeping Up With The Kardashians despite knowing it’s the worst show on television. Letting your heart overrule your head is never a good idea, because once that happens, the lender is going to win every time.
It’s also a never a good idea to get angry during negotiations. The idea is for you and the lender to come to an amicable resolution, but if you get angry and drop a few F-bombs along the way, chances are negotiations will end quickly and there will be no way back for you.
Be strong, and be prepared to walk away
This ties in with keeping calm during negotiations, but if they aren’t going well, you need to be prepared to walk away. You’ve set a limit to how much you’re willing to spend based on your income, and if you can’t get the deal that suits your lifestyle, you have to say your goodbyes, hang up the phone and move onto the next lender. This process could take a while, and you may feel that pang of disappointment a few times along the journey. But you don’t want to take on car finance that is a struggle to repay, because financial stress can manifest itself into other areas of your life, like putting a strain on relationships and making it difficult to pay rent and other bills.
Don’t let a lender talk you into a loan you don’t want. If something doesn’t feel right, it’s okay to put negotiations on hold, hang up the phone and think carefully about what has been proposed. Until you sign on the dotted line and submit the paperwork you can always walk away. Only enter into a contractual agreement when you are completely satisfied with everything that has been offered, and the terms and conditions suit you and your financial situation.
You always have other options
If you still don’t feel confident that you can get the job done, there are car finance experts worth speaking to who can go into bat for you. Take a look at their advice for yourself, and if you’d rather they took the lead, it’s a great way to get a positive result without the stress you may feel if negotiating on your own. Car finance brokers often have excellent relationships with a wide range of lenders, and are able to source deals that the general public don’t have access to.
Either way, being prepared for what’s coming is the best way to get the right car finance deal for you. If you’re calling lenders without doing any research on yourself or the market, you’re setting yourself up for a big financial fall that you could be paying for in more ways than one for the next few years of your life.