How can you negotiate a car loan?

If you have finally planned to buy your dream car, then you have probably already thought carefully about the brand, model and even the right color. So you no longer have to invest much time and effort here. You can therefore fully focus on perhaps the most tricky, next step: signing the documents that will seal the purchase.

At the moment that you have not yet arranged the financing of the car for the visit to the car dealer, you will have to check with the seller whether there are financing possibilities through the dealer. The seller of the car, just like the financial adviser of the company, will try to sell you everything, ranging from extensive guarantees for all parts of the vehicle to extra maintenance during a certain period after the purchase. You must therefore be prepared for the sales pitch constantly fired at you that you will undoubtedly have to deal with when you visit the garage.

Negotiating when purchasing a car

Negotiating when purchasing a car

By giving you a number of tools, we want to help you to be more firmly in your shoes when negotiating with the car salesman or the provider of a car loan. After all, if you can negotiate well, you can often gain a lot of benefits, regardless of whether you are going to buy a new or a used car from any dealer. The tips below will certainly be worth reading.

Always negotiate the price.

Always negotiate the price.

It may sound very trite or simple, but negotiating the price that you have to pay for your dream car often turns out to be quite difficult for a lot of people in practice. A trick that is often used by slick car sellers is to negotiate payments with customers. For example, you may be asked:

  • how much you are willing to pay each month per month,
  • what the most favorable payment will be,
  • which extras or discounts you want to redeem for a more affordable financing.

Car sellers like to negotiate the payments, as opposed to directly fixing the actual price of the car in question. That’s because they want to determine the final price based on the maximum payments that you are willing to pay each month. The moment you fall for this tactic, you will end up paying a much higher price for the car of your dreams. It is therefore better not to negotiate the financing of the car with the seller of the vehicle.

You should preferably negotiate the financing with an official car loan provider. By doing this, you can prevent interesting discounts and all sorts of extras from passing you by trying to get hold of a favorable financing from the seller of the car. If you nevertheless want to arrange a car loan with the seller of the car, then it is very wise to make this known only if the agreements regarding the purchase are completely fixed.

Keep the duration as short as possible

Keep the duration as short as possible

Car sellers have sometimes become true experts when it comes to offering creative financing and programs that make it possible for their customers to pay less money each month for the repayment of their loan. The shrewd sellers do this for example by stretching the number of years the car loan runs as much as possible. Today it is allowed to finance a car in quite a few years. The duration can even be ridiculously long in certain cases because a car will quickly fall in value once you have it.

Every year the vehicle will therefore be worth less and less. The ideal term for financing a car is therefore no more than 4 years. Preferably, you even go for an even shorter duration and in no case do you not let it exceed 5 years. Too long a term entails the risk that the car has already been written off, or is no longer in your possession, when you still have to pay for it every month.

Turn off all of extras

Turn off all of extras

As a rule, financial advisors will try to finance all sorts of available extras with you. For example, they will try to apply additional insurance, anti-corrosion treatment, textile protection treatment, extensive guarantees, car paint protection and an extensive alarm system. Although a large number of these extras are very useful, the seller will often talk about this. They also make huge profits by knocking their customers euros out of their pockets through these services and products.

However, it is possible to find most of these products and services cheaper at other parties. In turn, other products and services are no longer essential for today’s cars. You can also register with a roadside assistance service and take out paint protection insurance for a few euros with your own insurer. This also applies to other insurance policies that you do not need as standard. Moreover, these insurance policies are often already covered by most car insurance policies, so that you would actually double insure yourself and incur unnecessary costs.

Reject loans with a high interest rate.

Reject loans with a high interest rate.

Your credit score will determine the interest that you will have to pay on your car loan. Under normal circumstances, however, you do not have to take out a loan with a ridiculously high interest rate, just because you are not registered as favorably with the CKP, for example because you had a high debt in the past. People with good creditworthiness will generally be able to take out loans at a favorable interest rate.

However, if you are offered a less favorable loan, then you are wise to reject this resolutely. Many people who do accept such a loan will have to pay huge amounts of interest and ultimately have paid huge borrowing costs. Preferably, you therefore never take out a loan with exorbitantly high interest rates. Even when you don’t care what financial situation you’re in, it will never be worth paying extortionate interest just to be able to drive around in your dream car.

Do not borrow more than is necessary

Do not borrow more than is necessary

The seller of your dream car will do everything to knock you out of your pocket as much money as possible, for example by offering a large number of extra accessories and luxurious adjustments. All this under the guise of an even more ideal car. For all these extra accessories, however, you often have to pay a nice extra amount, and so borrow if you opt for financing from a lender.

However, taking out a larger loan also means that you will have to pay more in installments each month and / or will be stuck with the loan for longer. In this case, not only the repayments and the term will increase, but also the interest payment (a percentage of the outstanding debt) and the loan costs that will ultimately have to be paid will increase rapidly. The term of a higher loan can even lead to you being busy paying off the loan once your car has been written off for some time (or is no longer in your possession). If you want to prevent all of this, then it is wise to just borrow enough money to buy the car and not be tempted to push up the loan for often unnecessary extras.

Don’t let emotions influence your decision

Don

Buying a car can be an incredibly emotional decision. After you have had a test drive and have been able to sniff a hint of the typical smell of a new car, it will usually be difficult to just leave the garage again. However, if the seller is not willing to negotiate with you, you must be able to take the courage to resolutely walk away. You must remember that a seller does not want to do you a favor by selling you a car. You have to pay money before you can call the car your possession.

In all cases it is therefore important that you do not allow your feelings to be the cause, that you commit yourself to an unfavorable car loan that you will absolutely regret over the years. Don’t let those sellers give you the impression that you want the best for you when it comes to financing a product that they want to sell you.

Compare multiple car loans

Compare multiple car loans

If a seller offers you to arrange the financing of your car through his company, you can be stronger in your shoes if you know what an average car loan will cost and what taking out such a loan will be available to you. budget. You can do this by comparing the conditions and rates of other providers of car loans with the offer that the seller makes to you.

Before you go to the garage, for example, you can look up this information on a comparison website that focuses on (car) loans. That way, you know what a reasonable offer is and which points you should pay extra attention to during the negotiations that you are likely to conduct. In many cases, you will even soon come to the conclusion that it is better to arrange the financing of your dream car with an external loan provider.

Once you have found an attractive loan, you can of course use it during negotiations with the seller of the car. You can even challenge the seller a bit to come up with a better offer. If this is not possible, then you must resolutely abandon financing via the garage and go to work with another lender. This way you know for sure that you will not betray your own wallet.

Guarantee by a third party

Guarantee by a third party

In many cases you can take out a higher, or more favorable, car loan if a third person is willing to sign the loan contract with you. For the lender, the guarantee will mean extra security and reduce the financial risk run by the lender by lending money for a certain period of time. Of course, this does not mean that you will not remain responsible for the loan payment, together with the loan payment that will be charged

The moment you are no longer able to pay off the car loan without any problems, the creditor will turn to the person who has stood surety and who has signed the loan contract with you. However, it is not fair to have another for the costs of your dream car run, so you should prevent this at all costs. By taking out a larger car loan, through a third-party guarantee, your monthly repayments and pressure on your available budget will generally also be exerted. The financial consequences of this way of borrowing money for your dream car can therefore entail a heavy financial burden that you will definitely have to deal with every month for a certain period.

Borrow responsibly

Borrow responsibly

The moment you want to borrow money, regardless of whether this is for a car or another loan purpose, it is very important that you do so in a responsible manner. This means that you must know in advance whether you will and will be able to repay the debt without any problems and according to the agreements made. After all, the money that you receive every month can only be spent once. So if you have to spend too much money on the repayments of one or more loans, it can pretty much confuse your finances.

For example, your other fixed costs may come under pressure. But also bills can no longer be paid (directly) and you will sometimes even pay off one debt with the other. By borrowing money in this way, however, you will have to deal with increasingly higher borrowing costs. After all, every new loan will have to be just a little higher in order to be able to pay both the outstanding sum of money and the loan payment due. In this way you will borrow more and more money without making real progress with regard to solving your financial problems.

Borrow the consequences of irresponsible money

Borrow the consequences of irresponsible money

If you have an overpriced loan to finance your dream car, you can be confronted with it for quite some time. Not only will you have to pay high repayments every month, and therefore have less money to spend on other things, but you will also be less likely to take out another loan. Borrowing money to be able to drive a car can therefore have a negative impact on, for example, an application for a mortgage.

Before a lender and loan provider agrees to a loan application, both an internal investigation and a review at the CKP will be conducted to determine whether you are sufficiently creditworthy. A lender wants to limit the financial risk as much as possible when money is lent for a certain time. As soon as you have a long-term or an expensive car loan behind your name with the CKP, then the approval for a new loan may sometimes be at stake. Your monthly debt can thus be quite high in this way, so that the repayment of a possible new debt can entail extra risk for the provider of it.

Repayment problems due to irresponsible borrowing

Repayment problems due to irresponsible borrowing

If you have taken out a (car) loan without really thinking about its consequences, there is a real chance that you will sooner or later end up in financial difficulties. Not only is there a good chance that you will not be able to pay off this loan (in full), but also that other payments cannot be made because of the debt burden that the car loan has brought with it. After all, every month you have to deal with a lot of other fixed costs, such as:

  • the rent or mortgage of your home,
  • the costs of gas, water and electricity,
  • the premiums of various insurance policies, such as your health insurance policy,
  • the costs of subscriptions and memberships, for example for public transport, cable, internet and mobile phone.

By temporarily putting aside such fixed costs, you will soon find payment reminders and reminders in your letterbox. In certain cases, these messages will even be accompanied by a certain fine that you must pay in addition to the amount due. That way you will have to deal with more and more costs that you have to pay. Before you know it you will end up in a downward spiral and you will no longer see the forest for the trees.

In the worst case, at a certain point in time you can no longer pay certain bills and a bailiff will be hired by the creditor, or even by several creditors. If you are unable to make a payment arrangement with these bailiff (s), there is a good chance that your car, property or other properties that represent a certain value will be seized. It is even possible in this kind of situation that your income is seized and you therefore have to live on a monthly minimum. You will then only be able to fully use your income once the debts have been fully paid off, together with the various costs that have been added in the course of time, such as fines, administration and bailiff costs.

Conclusion

It may not seem very important if you want to arrange financing for your car, but being able to negotiate a loan properly can save you a lot of money and financial misery afterwards. Before you start talking about the amount and duration of a car loan, you first need to know the various borrowing options. These options will not be the same for everyone who wants to buy a car because the most suitable loan will depend strongly on a number of personal and financial circumstances.

For the negotiation of a car loan you also have to set a number of limits for yourself. Of course it is important to under no circumstances exceed these limits and, for example, to be tempted to borrow more money for extra accessories or more luxury. The costs of the car loan will, after all, ultimately increase considerably and therefore end up outside your personal limits. The result is often that you can no longer pay off the loan without any problems and you often have to struggle in all sorts of turns to make ends meet every month.

Being able to drive in your dream car will therefore often become a nightmare. The burden of financing rests very heavily on your shoulders and can even confuse all your money matters. For that reason, you must ensure that you are firmly in your shoes when negotiating a car loan and that you can definitely say no to, sometimes huge, temptations that will be thrown in your path by the vehicle seller. A salesman is always out to make as much money as possible from one car that goes out the door.