Having bad credit lowers your negotiating power with a credit provider, since you are considered a moderate- or high-lending risk. Nonetheless, there are a number of opportunities you can explore, including providers that specialize in offering secured and unsecured bad credit car financing. Taking a smaller loan not only improves your chances of securing approval, it will also help you spend less, which is vital to rebuilding your credit score for future borrowing. Below are negotiating tips to help you get started:
1. Offer and leave, at first
Begin by offering the salesperson your best price (within an acceptable range of the offer price) without negotiating. Simply tell the salesperson that you will buy immediately they match your price. Leave them your card and go. Someone will call you if your offer is within acceptable range. Avoid high car-sales seasons such as the holidays and around graduation when parents buy cars to gift new graduates. Dealerships are more ready to give in during low sales periods.
2. Pick your follow-up times
If nobody calls, wait until a weekend and call in shortly before closing. Ask for the salesperson with whom you were dealing and remind them that your offer to sign the paperwork if they match your price stands. The salesperson won't pass the chance to make one final sale for the week, particularly if your price is a possibility and they've had a low weekend. Month-ends are also ideal times to follow up, since salespeople are under pressure to meet sales targets and will budge more easily. Another idea is to call in following a bad-weather day. Such days typically have lower sales, which can increase your bargaining power.
3. Work with multiple dealers
Do the same thing with two or three dealers in your area who have the car you want. Visiting multiple dealerships will give you an idea about the true value of the car you're buying. You can also look online for market estimates so that you have a good place to start. Set your price $500-1000 lower than the market value. You will need to call aggressively, but you just might land the dealer willing to match that offer to close a sale, especially when sales have been bad.
4. Get your own financing where possible
If you can, secure your own financing from a bad credit auto loan provider. This will give you an idea on what type of cars to look at and your maximum expenditure. In addition, should the salesperson give in to your offer, you can close immediately as promised. However, you may need to work with the dealership's financier if you're taking advantage of some offer, e.g. special interest rates. In this case, be prepared to say no to terms that you don't need. Just because you have bad credit doesn't mean that you have to say yes to their auxiliary offers like extended warranty. Remember your goal is to keep your spending minimal. Be polite but firm.