Can You Negotiate a Lower Auto Loan Interest Rate?

Yes, but it often depends on who you are negotiating with and the effort you’re willing to invest. In most loan negotiations, your leverage will be dependent on other loan offers you receive. For example, if one lender offers you 12 percent, you can potentially go to another lender and see if they’re willing to give you 11 percent. If they are, you could go to the original lender and see if they can beat the 11 percent offer you received elsewhere.

This type of negotiation requires legwork on your part. You may not have much luck negotiating if you never seek out other offers and just ask the first lender if they can do better than what they initially offered, since you’ve given no evidence that you could find more advantageous financing from someone else.

Credit unions typically end up being the best option due to the lower rates available to members. Credit unions are member owned, meaning they’re not trying to maximize profit like an auto dealership, for-profit lender or a nationwide bank that’s interested in maximizing profits for their shareholders.

Negotiation and Shopping Around

Understanding Your Credit Score

Before you even step into a dealership or a bank, it’s essential to know where you stand credit-wise. Your credit score significantly influences the interest rate you’ll be offered. The better your score, the lower the rate you can typically negotiate.

Shop Around Before You Shop for a Car

Don’t wait until you’re at the dealership to think about financing. Get quotes from various sources beforehand. Having these quotes in hand gives you leverage when negotiating.

Negotiating at the Dealership

Dealerships often mark up the interest rates on loans they offer. If you’re armed with quotes from other lenders, you can use these as bargaining chips. Show them what others are offering and ask if they can match or beat those rates.

Do Loan Terms Matter?

Yes – a loan term can result in thousands of dollars in savings over the life of a loan. Getting a lower rate could potentially lead to you paying out more at the end of the term if the loan is longer than a shorter-term loan with a slightly higher rate. It’s important to look closely at the details of the loan and consider both the rate and term, as well as things like prepayment penalties.

Why Credit Unions May Be Your Best Bet

While shopping around and negotiating can certainly help you get a lower rate, there’s a compelling case to be made for starting (and likely ending) your search with a local credit union.

Member-Centric Approach

Most of the benefits members of credit unions enjoy are rooted in the fact that credit unions are member-owned, not-for-profit financial institutions. Their overriding goal is the betterment of members and the community – not generating profits for owners or shareholders.

Better Rates

Auto lending is a fundamental part of most dealerships’ profit strategy and usually includes an additional percentage that goes directly to the dealership to reward them for writing the loans. In other words, dealership loans are automatically marked up. The big investor-owned nationwide banks don’t have the same type of markup, but they still have an incentive to maximize rates to pad their bottom line.

Credit unions don’t have those same profit motives. Fees and interest paid to the credit union are reinvested to reduce fees and provide better rates to members.

Flexible Terms

No two members have identical financial situations, which is why fitting every car buyer into a narrow loan with inflexible terms isn’t usually in the best interest of the borrower. At OnPath Credit Union, we are committed to tailoring loans to fit the needs of individual members, including terms that make sense for your situation.

Personalized Service

The local nature of credit unions means you're likely to receive more personalized service. They often take the time to understand your specific needs and can provide guidance and support throughout the loan process.

Find the Right Auto Loan in New Orleans

Does your auto dealership really deserve extra interest payments on top of what they’ve already charged you for your vehicle? Members of OnPath don’t just get competitive rates and flexible terms — they can also borrow with peace of mind knowing that their payments are being reinvested into the New Orleans community.

Our auto loan team will go above and beyond to ensure that, regardless of your credit, you’re able to secure a competitive loan on your new vehicle. Call us at 800.749.6193 to learn more.