A common situation that individuals with bad credit can find themselves in is not being able to access the loans they require to make some large and important financial purchases. One of these purchases can include buying a vehicle.
Fortunately, these days there are many companies that offer bad credit loans to borrowers who do not have strong enough credit to obtain a loan from a bank. If you are thinking about where to go for financing for your vehicle – knowing you can turn to one of these alternative lenders can help make this process a lot more straightforward and hassle-free.
If, in particular you are thinking that it is a used vehicle you are going to buy with your bad credit loan, in order to improve the situation even further, you can learn some valuable negotiation tips that could save you money. Being able to negotiate some better loan terms – the monthly payments you make may can also be more manageable in the long run.
Here are 4 tips that you can take as you are negotiating the purchase of a used car:
1. Knowing Your Financial Boundaries
One of the first steps you will need to take as you prepare to buy your car is to identify how much you can afford to pay. Since you are opting for a used car this can be a great way to save some money -although there will still be many expenses to come as you pay for you car as well as continue to make loan payments over the term of your loan.
This is where your budget will come in handy. You should access how much in the way of funds you have to pay towards your car, including the down payment, and the ongoing costs of vehicle ownership such as fuel, maintenance, insurance, etc.
After you have determined how much you can afford, you will make sure you remember where you stand in terms of your financial boundaries and that you don’t go beyond these limits when negotiating your car loan.
2. Researching Your Vehicle of Choice, including the model & the seller
Also before you jump into making a vehicle purchase, you will also want to perform some research on the car. Since this is a used car, there is a need to address the depreciation value of that model. The mileage as well as the year, the condition of the vehicle should all taken into account and can provide insight into how much the car should be valued at as well as how it will run in the future. If, for example you know that that same car has a lower asking price elsewhere, then this can help you to negotiate the price.
It is also important to research the vehicle seller. Whether this is first hand word of mouth or via online reviews, knowing that reputation of the dealer or seller can also be an important part of the car buying and negotiating process.
3. Negotiating Fairly
While you want to be on your toes during the negotiating process, you also want to be sure to be fair when you are doing so. Being fair means that you are aware of both the price of what the car is valued at as well as what is your price limit. Here, there may be some room for compromise on the part of both you and the seller. With some wiggle room with the price, if the dealer states a higher price than what you have identified the car to be worth, be sure to state this and see how the seller responds. This is where doing your homework on your vehicle of choice will help with your negotiating power.
If this is a private seller and they do not seem to want to budge on their price, then knowing when to walk away and find another vehicle sale opportunity that is a better option is perhaps the smartest decision you could make.
4. Getting an Agreement in Writing
If the seller, especially a private seller and you have arrived at an agreement on the sale of the vehicle – you will want to make sure to get the agreement in writing. At this point you don’t want the price you have finally negotiated at to change in the near future. It is also preferable to pay with a credit card or a personal cheque so that there is a paper trail, in the event something goes wrong with the vehicle or the sale of the vehicle.
Additionally, some sellers may have you sign an ‘As Is agreement – however you should try to avoid this situation, especially if the vehicle runs into issues down the line and a problem with the vehicle has been masked somehow during the sales process. This part of the negotiation process is key not getting swindled or simply just being stuck with a damaged vehicle you can not do anything about.
All in all, negotiating the purchase of a used car can be a very challenging process – however it doesn’t need to be if done with a few key tips and strategies in mind. Whether you are buying from a private seller or a dealer, knowing that buying a used car still may come with some additional responsibilities. Used cars may still have some problems even if they are from a dealer – however you can make sure you negotiate the terms of this potential outcome as well.
In the mean time you can also look at your car loan as an opportunity to rebuild your credit and this can be down by continue to manage the repayment of your loan, while enjoying your new – used vehicle.