How to Negotiate the Best Vehicle Finance Deal

Last updated on December 14th, 2022 at 10:33 am

Did you know that over 90% of new vehicles are purchased with some kind of finance deal in the UK? Yes, they make buying a fresh motor more affordable, but often, they come with high-interest rates and non-budge conditions. 

For most, haggling is a lost art. People simply don’t want to negotiate, as they aren’t convinced they will get a better deal or that they should even ask in the first place. But, dealers make most of their profit based on commissions from selling various deals. Overselling happens as a result, which often means there is a lot more room available to haggle. 

Avoid getting ripped off and follow these simple steps to negotiate the best finance deal: 

Stop, and do some research first 

While it’s tempting to stroll straight to the dealership and begin the negotiations, the best car finance deals are usually found when you take the time to research first. 

Whether you choose to pay with cash, part exchange or via a finance plan, dealers’ prices aren’t fixed. So make sure you have a budget in place so you know how much you can afford. 

Look at the manufacturer or big-name dealership websites like Cazoo or Heycar to learn all about the make and model you’re interested in and how much it should cost. Then, place your search criteria into a handful of comparison sites online to get an average price overall. 

You should think about engine size and type, cabin space, fuel economy and more to get the most out of the model you’re interested in for a discounted price. 

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Finance deals aren’t exclusively dealership led

While the dealership will be more than happy to fuel all your car finance dreams, they might not offer you the cheapest or best deal. And after all your research and shopping around, going for the first finance agreement you see at the dealership will undo all that hard work. 

The National Franchised Dealer Association’s research has concluded that nearly one in five car dealers make more than half their margin from commission. This they get from car finance deals. So naturally, they will be more interested in you opting for the most expensive financing option available. 

While all the usual hooks of extended warranties and a series of rustproofing, windscreen and tyre protection may sound attractive, they are usually not worth the extra cost, no matter how good the pitch sounds.

However, this does give you more wiggle room to negotiate. But remember, more often than not, the best vehicle finance deals are found from online lenders. So make sure you compare various deals online before swanning down to the salesroom. 

Know the vehicle’s worth 

It’s easy to zoom in on how much you are expected to spend on monthly payments for your vehicle, but you need to remember the total cost of the car overall. So when it comes to discussing the finer points of the deal and your monthly payments, the dealer may try and lead you to focus on the “smaller” costs rather than the bigger picture. 

The best advice here is to ensure you’ve haggled the price of the actual vehicle before you arrange a car finance deal. But more than that, make sure you know what the added interest rates, fees and add-ons will cost you. 

Delete “what’s your best price?” from your vocabulary 

“What’s your best price?” is a simple question that, unfortunately, will lead to a simple answer from the dealer. Usually, a pointed finger at the price sticker! 

Instead, be upfront about what you want. Tell them a rough ballpark for what you are willing to pay and the make and model you have in mind. This is where earlier research and comparing makes and models comes in handy. 

Avoid high-interest loans

You’ll struggle to find a car loan that doesn’t have payable interest on top. But to avoid paying more than you’re comfortable with, you will need to find the most affordable deal with the lowest interest rate possible.

Here’s the rub. Your credit score will affect the interest rate the finance provider offers you. But don’t be afraid to ask them to adjust the overall amount, as they too will have some discretion about the rates they can offer you.

Another simple way to curb your total interest payments is to place down a bigger deposit and choose a shorter term for your loan period. 

If you have a poor or limited credit history, finance providers are more likely not to budge at all. However, you are entitled to walk away and search for other dealers or finance providers for your loan. 

The best of these are online specialist lenders who work with an extensive panel of providers. Together they work to get you the best deal possible via a bad credit car finance agreement. 

Tone down your excitement

Buying a new car is exciting. It opens up a whole world of possibilities, from getting your hands on a high-performance motor to picking out your favourite colour for the bodywork. 

With all that joy and anticipation on your face, you walk into the dealership. And boy, are they glad to see you. Dealers love an over-eager customer. Instantly, most of the work is done for them as you are an easy sell. 

Throw away comments pollute the air. “You need to grab this deal while it’s still available!” “There’s loads of interest on this motor.” “It’ll be gone before you know it!” 

So tone down your excitement and your eagerness. Remain calm, collected and take your time. 

Rather than focus on one vehicle, look at a bunch while you’re there. Make comparisons between each one, and try and get a feel for the one that is right for you. And lastly, book a test drive. It’s the best way to find out if the car you want is worth it! 

Don’t shy away from haggling. By not going in blind to the dealership – doing your research, comparing prices etc. – you have the best chance of negotiating a better deal. Know which motor you want? Do your prep and find your dream motor without breaking the bank! 

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