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Can You Negotiate with Auto Lenders?

Yes, you can negotiate with auto lenders, if…

You have a strong credit score. The health of your credit report determines your ability to negotiate with an auto lender. If you have a habit of paying all of your loan payments on-time and your FICO Auto Industry Option score (the score nearly every lender uses for auto loans) is high, then you will be in a stronger position to negotiate your interest rate and fees. Unfortunately, if you have a subprime credit score, you may have to take what you are offered.

Being an Educated Borrower

In either case, it is important to know what your score is, and an approximate interest rate you deserve based on that credit score. You can see up-to-date interest rate averages for various credit score ranges at myFICO here: If your dealer or lenders offers you rates higher than you expected, you can show them your research. However, you don’t want to do this straight away. You want to find out what interest rate they offer you first. If it is actually lower than you expected, then you don’t want to give them any reason to change their mind!

Comparing Quotes from Competing Lenders

Your best option is to shop around for the best loan terms. Having several quotes in hand gives you additional leverage to negotiate with lenders. Interest rate is not the only thing that you need to look at. See what fees are going to be added to the loan, as well. After shopping loans with your local lenders, try looking on the national level. Larger lenders may offer a slightly lower interest rate. Be sure to try some online lenders as well.

Some lenders may offer you a slightly lower rate if you have a higher down payment. You will want to have at least twenty percent of the purchase price, but a down payment of thirty percent could lower your rate by a percentage point or two.

About the Author

The author has many years of experience in automotive finance and insurance. However, each consumer's situation is unique. It is best to contact a finance specialist for further assistance.
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