Negotiate the Rate!
When you are first offered that 7% interest rate for a new car, ask to see the loan call sheet. No matter where the dealership submits your loan request, all finance companies provide the dealer a loan call sheet. It may be on their computer screen, faxed, or emailed to them. In each case, you can ask them to print it out and show it to you. If the buy rate says 5%, then tell them you want the 5% interest rate. If they say they can't do that, then walk, because another dealership will be happy to offer that rate.
Further, make sure you know which vehicles are carrying a manufacturer's interest rate of zero percent. Some dealers won't tell you that SUV you are looking at qualifies for a zero percent interest rate and instead charge you that whopping 7%. You can only imagine what the dealer is making on the back end reserve. Be informed before you buy and check Edmunds, a cay-buying consumer website to find tips as well as what current interest rates for new cars and rebates are for each make and model. This can change weekly, so be sure to do your research.
If you really want a certain vehicle and you just can't find another dealer who has it, and the dealer won't negotiate the interest rate, ask the dealer to give you a buyer's order and take it to your bank or credit union. Both will give you a much lower rate than the dealerships will. Be smart and savvy when negotiating the interest rate for new cars and don't just sign on the bottom line. Ask to see their paperwork and if they won't show it to you, move on.
For more information on buying a new car, read Tips for Purchasing a New Car: What the Dealer Won't Tell You to get the best deal at any dealership, regardless of vehicle make or manufacturer.
Image Credit: 2011 Ford Mustang/Ford Media Room