Can I negotiate the interest rate on dealer financing?
Finance manager offered 8.9% on a used car and I have 720 credit. Seems high. Can I negotiate the rate like the car price, or is it take-it-or-leave-it?
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asked 9 Aug 2024, 12:26 am by Olivia W.
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Yes, absolutely negotiate, or make them compete. At 720, 8.9% is high - should be closer to 6-7%. Get pre-approved elsewhere, bring the letter, say 'my credit union approved at X%. Can you beat it?' If not, use pre-approval. Often the dealer's lenders suddenly find a better rate when they realize they're about to lose financing revenue.
Dealers can mark up the rate from lender (dealer reserve). Lender might approve at 6.5% and dealer adds 2% profit. Having your own financing is leverage to reduce or eliminate that markup.