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Do I have to negotiate my vehicle purchase at the same time as I negotiate how much I get for my trade-in or the terms of a loan from the dealer?

You are not required to get a loan from a dealer or trade in a vehicle in order to purchase a vehicle from a dealer. You should negotiate each part of the deal separately and comparison shop to get the best overall deal.

Here are some steps you can take:

Step 1 - You can shop around and research vehicle prices as if you are buying for cash. Even if you think you might trade-in your vehicle, you don’t have to decide that when you are shopping around.

Step 2 - You can get an approximate value for your trade-in. You should look up the value of your current vehicle by comparing what you could sell the vehicle for at other dealers or to other persons directly (the “private sale” value). You can estimate its value by checking newspaper or online classifieds as well as resources such as Consumer Reports, Edmunds, Kelley Blue Book, and the NADA Guides (online or at your local library). 

Step 3 - If you still have an outstanding balance on the vehicle you are trading in, find out the payoff amount from your lender so you know how much you will have to pay before your old loan is fully paid.

Step 4 - Negotiate the interest rate for your loan separately, comparing interest rates obtained from your bank, credit union or other lender. Before you go to the dealer, you can find out what interest rates you may qualify for based on your credit history, how much you want to pay for the vehicle, what your trade in is worth, and what you can make for a down payment.

Negotiating the price, the trade-in value, and financing rates separately and deciding whether to finance the new purchase with someone other than the dealer if you get your best offer there - may improve your overall deal. Breaking the transaction into different pieces may take some of the pressure off you while you shop around. This can save you money in the long run.