Should you tell car salesman your monthly payment?

Even though the monthly payment is the most important factor for many buyers, you should never discuss this with the dealer during negotiations. The first step is to set the price. Dealers often include monthly payments in negotiations to confuse the buyer about what they are actually paying for the car. Negotiating purchase prices is the safest option, says John Nielson in CNN article.

Nielson, director of AAA, explains that there are many variables that affect monthly payments. Dealer Makes More Money When Contract Is Based on Monthly Payments. Once you focus on a monthly payment amount, the process moves forward without analyzing the details of the contract, such as the interest rate, the length of the loan, and the amount you will spend if you keep the car until the end of the loan. You learn that data after signing on the dotted line.

Don't let the dealer take out a credit report. Once the dealer knows your credit score, it can affect negotiations for the car you are interested in buying. It is best to tell the seller that all they are interested in is getting the best price for the vehicle. This is the biggest mistake a buyer can make.

Often, the dealership focuses on a monthly payment scheme, insisting that you are getting a great deal, but at the end of the day you won't really know what you paid, advises Gentile. It may seem contradictory, but while the monthly car payment is the most important factor for many buyers, never tell the dealer that's what matters to you. Buyers want to buy cheap cars, but hate dealing with car sellers, Nationwide study finds. If you can make the seller believe that you give the car a lower value, they will lower the price to a level that they perceive is in line with that reduced value.

However, since it seems rational to negotiate from a monthly payment perspective, it helps to understand why experts warn against this approach. It's also natural for a car salesman to ask a buyer what they do for a living during the course of a conversation. If you're among the few who have enough cash reserves to pay for your car up front, or if a third party lender has already pre-approved an auto loan for you, you can often get a better car deal by keeping that information to yourself. The point is that if you buy a car based on the monthly payment you can afford, the dealer will have freedom of control over the total cost of the car.

Negotiations should begin after the dealer makes an offer, without knowing your target price, and you decide the price of the car. Some car sellers offer good deals to customers who know they're excited about their cars, but it's best to take the excitement out of the car-buying experience altogether, no matter what effect it may have on the dealership. Not only will buying a new car cost you a lot, but the buying process isn't always a pleasant one. It's best not to commit to financing, but it's a good idea to align interim financing with MAFCU before you go car shopping.

The other pitfall is that if the dealer knows they owe you a certain amount for the trade-in, it may be more difficult to get them to give up the MSRP of the car they are buying. The seller will gladly work to organize these contract variables to obtain the desired monthly payment. Once your trade-in is factored into the discussion, the dealer can take advantage of it to confuse you with regard to how much you are actually paying for the car you are buying. Most car dealers use a technique called “price discrimination,” which is legal, in most cases, according to the Federal Trade Commission.

In fact, some buyers choose to completely eliminate the loan portion of the car buying process by getting an auto loan from the bank before buying the car. .