Cartoon car salesman.

Auto Loan Tricks

Dealing with a dealership can be a big pain and it can really ruin the thrill of getting a new vehicle. Most people tend to rush through the process in order to get it over with but this can be costly. Dealers have a lot of sneaky ways to pad their pockets and a little haggling or negotiating can save you big. Here are some of the hidden ways that you can save money on your next dealership auto loan.

1. Dealer Add Ons

Most dealers like to add things to the vehicle to inflate the price. They charge ridiculous fees for these add ons and most of the time, they are things that you would not otherwise want and that you could surely get somewhere else. Some common examples are tinted windows, anti theft etching, tire safety valves, nitrogen filled tires and the list goes on and on, depending on the creativity of the dealer. Now, you might truly want tinted windows but you can get them way cheaper outside of the dealership.

To save money on these dealer adds, simply tell them to take them off. In most cases, your dealer will fold on them and remove them or at least discount them. If they have already tinted the vehicle for example, you might just ask for a discount on the price. Things like anti theft etching and service contracts can be taken off entirely. If they refuse, always be willing to walk out of the dealership, trust me, in most cases, they will stop you.

2. Trade In Values

If you are trading in a vehicle, never take the first offer. They are almost always holding something back for negotiation. In most cases, you can get an extra thousand dollars and possibly more for your trade in. Know the value of your trade going into the deal. Look at Carfax and NADA for free trade in tools that will give you an idea of the value.

It also helps to know the tricks that they will use to devalue your trade. This typically starts with the salesman walking round the car and pointing out every scratch and ding. If it is normal wear and tear be sure to mention that. Also be sure to let them know of the things that you are aware of that increase the value. These include low mileage, popular accessories and new tires. If the car is ready to sell and can go right onto the lot, it saves them a lot of money in prep.

3. Purchase Price

Obviously, the purchase price is negotiable but a lot of dealers try to be tricky. They will offer things like internet pricing or no haggle pricing. Unless you are going to a place like Carmax, there is no such thing as no haggle pricing. There is almost always a little wiggle room. If you think that price on the paper is a great deal, ask them to take another thousand dollars off and be prepared to walk out if you do not get it. You can always come back if they do not cave or stop you from walking out. It never hurts to try.

Remember that a dealership makes money on a vehicle even if they sell it at invoice. it is called the dealer “holdback”. They will always act like they are giving it to you but that huge dealership was not built on charity.

4. GAP Insurance

Unless you are putting a lot of money down in the form of cash or trade, you will probably be upside down in the first year or two of your auto loan. GAP is a really good idea and can save you thousands if your car gets totaled while you are behind. Without GAP, you would have to pay the difference that your auto insurance company does not pay.

Like almost everything else though, they pad the cost of GAP and you can negotiate it. If they offer you a policy for $900, tell them you want it for $500. Not a lot of money but that can save you $10 to $15 a month on your payment, depending on your interest rate.

Not sure if you want GAP at all? Keep in mind that if you sell your car off early, before the end of the loan term, you get a portion of the money you paid for GAP back.

5. Interest Rates

Speaking of interest rates, those are often negotiable too. If you have picture perfect credit and qualify for a 0% or 1.9% interest, there is probably nowhere to go but for the rest of us, there is room to haggle. You can probably get your interest rate down a good 2% in many cases.

Just remember, the deal is not done until you sign the contract. The negotiating carried on when you go to finance. When you see your interest rate offer, send it back. Say you were expecting a lower interest rate or a lower payment and see what happens. Chances are, they will mysteriously be able to lower your rate. A 2% reduction in your interest rate would be huge and can save you hundreds of dollars.

6. Extended Warranties

The dealer makes a lot of money on extended warranties. If you decide that you really want one, you can negotiate the price down. In many cases, you can get that extended warranty for about half of the cost that it is first offered to you for.

Before you decide on an extended warranty though, consider how long you will keep your car. Are you going to keep it beyond the manufacturers warranty? Also, are you going to keep meticulous records to keep from getting a claim denied? Even if you get the warranty reduced, someone will still probably make money on it because of it going unused.

7. Hidden Rebates

Your dealer will probably have some factory rebates for you but there might be hidden rebate that they never mention or perhaps do not know about. Are you a member of a discount club like Sam’s for example? Look on their website in the auto purchasing section for rebates on new cars. There will often be a form that you can print for a $500 or $1000 rebate on certain models. Another good example is USAA. They too offer rebates for members, just log on to the website to see what the current offers are. Take a look at any company or website that you belong to and see if they offer rebates for vehicle purchases, you might be surprised.

8. Putting Money Down

Putting a sizable down payment down can save you money in several ways.

First, it might save you money on Gap insurance. That can be an instant savings of 600 dollars or more. All you have to do is put down enough money to cover the initial depreciation. 20 percent is a number to shoot for.

In addition, the more you put down, the more that you will save on your interest rate. You could shave several points off of the rate with as little as 10 percent down and that can save you hundreds, if not thousands in interest over the course of your loan.

In Conclusion

As you can see, there are a lot of ways to get the price down on a vehicle at most dealerships. Of course, the true NO HAGGLE places like Carmax don’t play this game but that is just a reason to avoid that type of dealership. If you know how to haggle and are willing to play the game, in most cases, you will pay far less at a traditional dealership. It might take a little work but it can save you thousands. Plus, who knows, yo might be able to think of it as a challenge and have a good time.

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James Car is a finance, loan and budget expert based in the United States. After attending Brookhaven college, he went on to become a successful entrepreneur. He now enjoys writing articles that help people save and make the most of their money.