Can I negotiate a car loan interest rate with the dealer? | Consumer Financial Protection Bureau (2024)

FAQs

Can I negotiate a car loan interest rate with the dealer? | Consumer Financial Protection Bureau? ›

Yes, just like the price of the vehicle, the interest rate is negotiable. Dealers may not offer you the lowest rate that you qualify for. To get the best interest rate, shop around with multiple lenders and negotiate.

Renegotiate your loan terms

You can also request a car loan modification. The lender may be willing to extend your term — which means paying more interest — or reduce your interest rate. The latter is better for saving you money over the loan term.

Car Financing Through a Bank:

Since they know you and have a relationship with you, they may be willing and able to offer you a lower interest rate than a dealership. The bank may even offer incentives to financing with them if you do all your banking under their roof.

Can you ask a car dealer to lower the price? Yes, you can negotiate on the price of a car. However, it helps to do your research on the vehicle's fair market value and out-the-door price beforehand so that you know how much room you have to haggle.

Generally, a good APR for a car loan might look something like this: Excellent Credit (750+): 3% or lower for new cars, 4% or lower for used cars. Good Credit (700-749): 4-5% for new cars, 5-6% for used cars. Fair Credit (650-699): 6-7% for new cars, 7-8% for used cars.

Contact the lender to explain that you are struggling to stay afloat financially and risk falling behind on your auto loan payments. Ask if they will lower the interest rate or extend your loan term to make the monthly payments more affordable.

Yes, just like the price of the vehicle, the interest rate is negotiable. Dealers may not offer you the lowest rate that you qualify for. To get the best interest rate, shop around with multiple lenders and negotiate.

The law says that lenders cannot charge more than 16 percent interest rate on loans. Unfortunately, some lending companies owned by or affiliated with vehicle makers have devised schemes whereby you are charged interest at rates exceeding the maximum permitted by law.

Dealers make money off in-house financing because they mark up your offered rate. For example, if you could qualify for a loan at 7 percent through a bank, you may receive an offer of 9 percent through dealership financing.

What not to say to a car salesman? ›

When negotiating, it helps to be able to justify what you're asking for, he adds: “Instead of saying, 'I want to pay this,' try something like: 'I've looked at five or six different cars that are similar to yours in the market. The price range goes from $19,500 to $20,700. I'm comfortable making an offer of $19,100. '”

According to our research, AutoPay currently offers the best auto loan rate for new car purchases, with annual percentage rates (APR) as low as 4.67% for new vehicles. PenFed Credit Union, Auto Approve, Consumer's Credit Union, Auto Credit Express and iLending also offer some of the most competitive rates available.

Refinancing is one of the easiest ways to get a lower car payment and more favorable interest rates to save money. You can reduce monthly car payments without refinancing by trading in your vehicle, selling it, or negotiating with your lender.

If you can afford it, make a larger down payment on your loan. This will reduce your loan amount and, therefore, your EMIs. Prepayment: If you want to reduce EMIs on an existing car loan, then consider prepaying a part of the loan if you have the funds to do so.

In a renegotiated loan, all parties agree to modify the loan's original terms. Modifications can include the interest rate or the length of the loan. In some cases, the rate structure can be modified by changing from a fixed-rate to an adjustable-rate loan or vice versa.

For most borrowers, buying a car is still an expensive proposition. Auto loan rates are expected to stop rising and possibly start descending in 2024, but they'll likely remain elevated in comparison to recent years (alongside the broader interest rates environment).