Advertiser Disclosure

Auto Loan

Refinance Auto Loan Rates: 4 Best Places to Look in 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

When you’re looking to refinance your auto loan, it’s best to check around at multiple lenders for the best rates. Because many lenders today offer online loan options, you can check out the most current offers without putting in the actual legwork of shuffling from bank to bank in person.

See what rates your bank or credit union advertises. Check their websites or call them by phone. Often they’ll give rate discounts when you make automatic payments using one of their checking accounts, which is an easy bar to meet if you’re already a member.

Look at competing lender offers. Whatever your current bank or lender says, compare them to other deals by shopping online. There are dozens of auto loan options out there, but don’t be intimidated. We’ll help you find the best places in this guide. It won’t hurt your credit if you apply to a few different lenders for the same type of loan within 14 days, so don’t let that stop you from applying to one of the best car refinance companies if something looks good.

Look at what your current lender advertises. Not all companies refinance their own loans, but, for those that do, you might be able to refinance with the same company if you qualify for a lower rate or different term.

In this guide, we’ll show you the best places to start shopping for an auto loan refinance, as well as provide tips on how to decide when refinancing is the best move for you.

The best places to shop for an auto loan refinance

To help you choose the right lender for your refinance, we picked out some of the best places to refinance a car online. We started by analyzing more than 450,000 auto refinance applications for 17 lenders submitted through the LendingTree marketplace. We then compared and selected the top four lenders that 1. consumers were choosing most often and 2. offered the lowest average APR.

LendingTree

If you are looking to explore your options, LendingTree is a good starting place. Its online auto lender marketplace lets you compare up to five lenders side by side. You can find lenders that offer loans with APRs starting at 3.99% for New car financing. Motorcycle and RV financing and refinancing are available as well. People of all credit scores may apply. After completing a short online form, you may be able to see real interest rates and find out if you prequalify for any offers instantly.

Pros:

  • LendingTree partners with dozens of financial institutions that compete for your business. Depending on your circumstances, you may be matched with one or more lenders at one time, allowing you to potentially compare several offers and choose the lender that has the best rate and loan terms for you.

Cons:

  • Some of the lenders on LendingTree don’t offer prequalifications. You may or may not be matched to one that does a preapproval, not a prequalification, which would require a credit pull.

A prequalification is a not an automatic approval. Some auto lenders may not offer a prequalification at all and they may require you to submit an application for approval.

How to apply
Go to the LendingTree website and fill out the prequalification form. You’ll need the vehicle information, your information, including contact, loan, employment and income details on hand.

LendingTree
APR

As low as
3.99%

Terms

24 To 84

months

Fees

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

LendingTree is our parent company. LendingTree is unique in that they allow you to compare multiple, auto loan offers within minutes. Everything is done online. LendingTree is not a lender, but their service connects you with up to five offers from auto loan lenders based on your creditworthiness.

iLendingDIRECT

Like LendingTree, iLendingDIRECT is an online marketplace where you can potentially be directed to multiple auto lenders. Once you submit an application, the company will shop around for the best loan offers for you. It works with more than 20 financial institutions to offer a wide range of refinancing options, cash back loans, lease buyouts, and more. APRs start at 1.99%. Cars, trucks, motorcycles, boats and RVs can be refinanced; maximum terms and amounts depend on the type of vehicle.

Pros:

  • In some cases, you can skip the first month’s payment to give your wallet a break. If you don’t qualify for refinancing because of poor credit, iLendingDirect will work with you to help you improve your credit so you can qualify.

Cons:

  • Compared to other refinance marketplaces, iLendingDirect has relatively few financial institutions as partners.

To apply
Either call them or fill out a short contact form online and they’ll reply to you. You should have your personal contact information, your vehicle’s year, make and model, and your loan information at hand. With this information, they’ll find the best offers you’re pre qualified for, and you can choose from those which loan you’d like to apply for.

iLendingDIRECT

SEE OFFERS Secured

on LendingTree’s secure website

rateGenius

rateGenius is another online loan marketplace, but this one specifically works with borrowers seeking to refinance. They have a network of 150 lenders around the country. APRs start at 2.99% and loan amounts and maximum and minimum loan terms will vary depending on the type of vehicle.

The original loan term may be shortened or lengthened, though usually rateGenius will match the term of your new refinanced loan to the amount of time left on your original loan.

Pros:

  • The application takes a few minutes and refinance offers are ready within 48 hours.

Cons:

  • rateGenius doesn’t refinance specialty vehicles. It may also charge fees for use of its marketplace. This plan might not be the best fit for you if your income ebbs and flows from month to month.

To apply
Give them a call or fill out an online application form. You should have the following information ready.

  • Current loan information (lien holder name, monthly payment)
  • Vehicle information (make, model and style; VIN; mileage)
  • Employment information (along with a phone number for employment verification)
  • Personal information (SSN, name and contact details)
rategenius

SEE OFFERS Secured

on LendingTree’s secure website

Autopay

The online loan marketplace AutoPay works to provide refinancing to people at different levels of credit. The minimum loan term is 24 months, while the maximum goes up to 84 months. You have to have at least $5,000 remaining on your loan and no more than $100,000. APRs start at 1.99%.

Pros:

  • This would be one of the best refinancing companies to go with if you have a small amount remaining on your loan or less-than-great credit.

Cons:

  • Depending on its lending partners at the time, Autopay doesn’t refinance specialty vehicles other than motorcycles.

To apply
Visit its website to fill out an online prequalification form. You’ll need your driver’s license, a payoff letter from your current lender, proof of insurance on the vehicle, proof of income and proof of residence. Autopay then works to find the best refinancing offers for which you’re pre-approved, and you can choose which to apply to.

AutoPay

SEE OFFERS Secured

on LendingTree’s secure website

Benefits of refinancing your auto loan

There are different ways to ditch a bad auto loan, or simply improve your payments to suit your current cash flow, and refinancing is a great way to do it.

Nicolas Ortiz, an auto insurance agent and adjuster at USAA headquarters in San Antonio, Texas, has worked in the industry since 2011 and did a stint as a finance manager at a car dealership for over a year.

“Most people look to refinance in order to lower their payment,” he said, “and you can get other benefits that come with it.”

Here’s more about the benefits of refinancing:

Get a better interest rate. If your credit has improved from when you first signed for the loan, you may qualify for a lower APR. “If you apply to refinance and get a lower APR, not only will your monthly payments be lower, but the overall interest that you pay will be lower, too, if you keep the same term.” Ortiz explained.

Decrease your monthly payment. If you’re strapped for cash, a lower car payment can make a big difference. It could give you some breathing room or prevent a repossession. To get a lower monthly payment, you may refinance with a lower APR, refinance for a longer term or both. Keep in mind your total interest cost may be higher over time when lengthening the term of the loan even if the APR is low.

Decrease your loan term to reduce interest payments. The less time you spend paying back a loan, the less you are likely to pay in interest payments. “To lenders, a greater length of time means a greater amount of risk; greater risk means more interest.” Ortiz told MagnifyMoney. Decreasing your loan term when you refinance will likely decrease your APR, but increase your monthly payment.

If you don’t want to commit to a bigger monthly payment when you refinance, one way to get a similar result is to simply refinance to get a better APR, then make monthly payments that are larger than the required monthly payment. This way you’re going to pay the loan off faster and pay less interest, but you have the option to make the lower required monthly payment if funds are tight.

Double-dip. If you have excellent credit and finance through a manufacturer when buying a new car, you usually have a choice of either getting a low APR, or getting large rebates from the manufacturer. “What you can do is if you qualify for manufacturer financing, take the rebates, sign up with them, and then turn around in a month and refinance with a credit union or bank that will give you a lower APR.” Ortiz said. You get the rebates from signing up with the manufacturer and the low rate from refinancing.

What to watch out for

A refinancing company may offer you add ons like GAP insurance or a warranty, which is also called a vehicle service contract (VSC). Make sure you know exactly how much each costs you and what it does. Don’t just say yes to a monthly payment that includes it.

GAP insurance stands for Guaranteed Asset Protection and covers the debt on the car that your auto insurance company doesn’t. For example, if you get a new car, don’t give a down payment, and crash the car a month later, what you owe on the car will be more than what the car is worth. GAP insurance covers the “gap” between what you owe and what the insurance company pays.

An extended warranty, also called a vehicle service contract (VSC), is an insurance product that will cover certain repairs to the vehicle. It is not your regular car insurance and won’t cover car repairs if you’re in a crash. It will generally cover repairs if something breaks from wear and tear.

For example, if your AC goes out because you live in a hot climate and like to make your car an ice box in the summer, the VSC might cover it. It depends on what type you get. It can be complicated, so, if you’d like one, know that you can negotiate on it and make sure you know what you get for the price you pay.

Questions to ask before you refinance an auto loan

While you can refinance at anytime, some people try to refinance when it may not make much of a difference, or may make a difference in a worse way.

Here are some questions to help you figure out if refinancing your auto loan is right for your situation.

Has your credit changed significantly?
If your credit’s gone up enough to push you into a higher score band (from “fair” to “good” for example), you should definitely check out the best auto refinancing companies to see if you can get a deal. You can use LendingTree’s free credit score tool to check your credit status. Note: LendingTree is the parent company of MagnifyMoney.

If you have a high APR auto loan because of poor credit, has your credit improved?
Many people who have poor credit and little choice but to sign for a high APR auto loan might ask when their credit will improve to the point they’ll be able to refinance at a lower APR — but it really depends on your specific situation. There are steps to successfully improve your credit. Making monthly payments on-time and in-full should help improve your score. Just have patience — lenders typically report payment behavior to the credit bureaus once every 30 days, but that can vary by lender.

If your credit hasn’t increased, or it’s dropped into a lower category, refinancing at this time probably isn’t right for you.

Do you want to add or remove a co-signer?
By refinancing with a new lender, you may have the ability to remove a cosigner from the original loan. However, you may struggle to get approved for refinancing if your credit is poor, you are underwater on your loan (meaning you owe more than the car is worth) or if you have missed several payments.

If you are looking to add a cosigner to a loan in order to get approved for better loan terms, make sure they understand the pros and cons. Their credit history can be positively affected by you making payments, but they will also be accepting liability for the loan if you fail to make payments.

Are you underwater or upside down?
Do you owe more on the car than it’s worth? If you do, you might want to think about paying down the loan before refinancing. You’ll be able to get the best deal in refinancing if your loan is equal to or less than the value of the car. However, if you know you can get a better rate now, even if you’re underwater, it might be worth doing so. That way, more of what you do pay on the loan goes to the principal and you can pay down the loan faster. Then, once you’re no longer underwater, you can refinance again for an even better rate. You’re not limited on the amount of times you can refinance.

Are you in danger of a repossession?
If you lost your job, had a family emergency, or just have a lot of trouble making payments, refinancing can make the best of a bad situation. You may not be able to finance into a loan that has a lower APR, but you may get a loan with a longer loan term, which will lower your monthly payments and give you more room to catch up.

Have auto loan rates dropped recently?
National trends in loan interest rates change based on national policy, politics and demand. Rates are expected to continue to increase this year, and indeed, rates hit a five-year high in February 2018. This isn’t a good trend for the auto loan consumer, as auto loan rates increase with it. If there is a sudden jump in the national rate for the season, consider refinancing a little later. If there is a sudden dip, like there was in the fall of 2017, it’s a good time to shop around.

When to consider refinancing

When to avoid refinancing

If the car is worth more than you owe on the loan.
Positive equity in a vehicle is attractive to lenders and will put you in the best situation to get a great rate.

If your credit improved significantly from the time you signed the auto loan.
By paying your obligations in full and on time, your credit might have gone up since you first got your auto loan.

If you’re in danger of a repossession.
Skipping and missing payments can have a negative effect on your credit. Refinancing could help you get a lower monthly payment you can afford and help you avoid trashing your credit score.

If you want to change something with a cosigner.
You could add on or take off a cosigner to the benefit of your interest rate.

If your credit has worsened significantly from the time you signed the auto loan.
Lenders base the interest rate heavily on your credit history and your credit score. Getting an auto loan with bad credit is not necessarily impossible, just more expensive.

If you owe a lot more on the loan than the car is worth.
If the car is worth a lot less than what you’ve promised to pay, the loan is riskier, thus making it harder and more expensive for you to get a loan — but there are ways to handle this type of situation.

If national interest rates rise by a point or more.
Interest rates on auto loans change along with the flux of interest on the U.S. 10 Year Treasury Note, because the loan terms are similar. If it shoots up, the lowest APR you can get will go up as well. Depending on your situation, it might be better to wait to shop for the best refinancing deal — or, if you want to refinance as soon as possible, go ahead and refinance and then keep on eye on national rates to maybe refinance again if there’s a big change.

If the car is brand new or really old.
Cars depreciate the most in the first two years. If you didn’t give a down payment, odds are that you’re underwater on your auto loan during that time period. Really old cars also aren’t really valuable to lenders and most have limits on vehicle age and mileage.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Jenn Jones
Jenn Jones |

Jenn Jones is a writer at MagnifyMoney. You can email Jenn at [email protected]

Advertiser Disclosure

Auto Loan

Navy Federal Credit Union Auto Loan Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Getty Images

If you are shopping for an auto loan, it’s helpful to get quotes from multiple lenders to ensure you receive the lowest possible interest rate and most favorable terms. For members of the military and their families, Navy Federal Credit Union could be an option.

Here’s what we found out about Navy Federal Credit Union and its auto loans.

About Navy Federal Credit Union

Navy Federal Credit Union, which was founded in 1933 and is headquartered in Vienna, Va., serves the military community. Its “once a member, always a member” policy means that you can continue to use the credit union if you or your family member leaves the military.

The following groups are eligible for membership:

  • Active-duty members of the Air Force, Air National Guard, Army, Coast Guard, Marine Corps and Navy
  • Delayed Entry Program (DEP) enlistees
  • Department of Defense officer candidates/ROTC participants
  • Department of Defense reservists
  • Veterans, retirees and annuitants

Parents, grandparents, spouses, siblings, children and grandchildren in a military family are also eligible, as are household members. Department of Defense civilian employees can become members, too.

Consumer Financial Protection Bureau action against credit union

It’s important to note that in 2016 the credit union was ordered by the Consumer Financial Protection Bureau, or CFPB, to pay $28.5 million after an investigation found that, among other things, it was improperly restricting account access for members with delinquent loans. The CFPB accused the credit union of making false threats of legal action and wage garnishment, threatening to contact delinquent members’ commanding officers and lying about the consequences of falling behind on loan payments. Of that total, $23 million would go to victims who received threatening letters. The credit union was required to correct its debt collection practices.

Navy Federal Credit Union: At a glance

When shopping for an auto loan, it’s crucial to get several quotes, no matter your credit score. If you have an array of loan options, you’ll have more negotiating power with a dealership.

APRs

APRs for Navy Federal Credit Union auto loans, which are based on creditworthiness, currently start at 2.99%.

Here’s a breakdown of APRs based on the type of vehicle:

  • New vehicles: 2.99% to 6.29% for loan terms between up to 36 months and 96 months
  • Late-model used vehicles: 3.29%* to 4.79%* for loan terms between up to 36 months and 72 months
  • Used vehicles: 4.99% to 6.29% for loan terms between up to 36 months and 72 months

Used vehicles older than 20 years are paid back at a collateral loan APR, which can be between 8.09%* and 8.9%* for loan terms between up to 60 months and 180 months. Preapproval isn’t available for this type of loan.

Your rate could be higher, depending on your credit profile and the value of the vehicle.

Active-duty and retired military members may be eligible for an additional discount with direct deposit to a Navy Federal Credit Union account. To get the discount, call or visit the credit union.

Vehicle requirements

Navy Federal Credit Union has specific vehicle requirements for its auto loans. For new vehicles, the minimum loan amount is $30,000 if seeking a term of 85 to 96 months. Used vehicles are 2017 models or older, or any model year with more than 30,000 miles. Late-model used vehicles can be model years 2018 to 2020 with 7,500 to 30,000 miles.

Boat, motorcycle and RV loans

The credit union also offers new and used boat, motorcycle and recreational vehicle (RV) loans. These loans only apply to recreational vehicles, so full-time RVs aren’t eligible. Here’s a breakdown of APRs based on the type of vehicle:

  • New boats: 6.05%* to 8.75%* for loan terms between up to 36 months and 180 months
  • Used boats: 8.05%* to 9.2%* for loan terms between up to 36 months and 180 months
  • New motorcycles: 7.25%* to 8.6%* for loan terms between up to 36 months and 84 months
  • Used motorcycles: 8.09%* to 9.35%* for loan terms between up to 36 months and 72 months
  • RVs (collateral loans): 8.09%* to 8.9%* for loan terms between up to 60 months and 180 months

These rates are based on creditworthiness, so your rate may be higher.

As with auto loans, there are specific requirements when it comes to boats, motorcycles and RVs. Check with the credit union for details.

Refinancing

Navy Federal Credit Union also offers auto loan refinancing.

Here’s a breakdown of APRs based on the type of vehicle:

  • New vehicles: 2.99% to 6.29% for loan terms between up to 36 months and 96 months
  • Late-model used vehicles: 3.29%* to 4.79%* for loan terms between up to 36 months and 72 months
  • Used vehicles: 4.99% to 6.29% for loan terms between up to 36 months and 12 months

Members may be eligible for $200 cash back 61 to 65 days after completing their first scheduled payment when refinancing from another lender.

A closer look at Navy Federal Credit Union auto loans

Highlights of Navy Federal Credit Union auto loans

A down payment isn’t required to get a Navy Federal Credit Union auto loan, but making one could improve your loan-to-value ratio, which could boost your chances of getting approved.

If you have a limited credit history, you may still get approved with a co-applicant.

You could get a decision about your application in just a few minutes. The credit union offers preapprovals, so you know how much money you can spend on your vehicle before you start shopping. If you get preapproved, your rate will be locked for 60 days.

The credit union offers an auto buying program, through a nationwide network of dealers, as a straightforward way to buy a new or used car. You can even get special military prices if members need to buy a new car while overseas.

You can get optional guaranteed asset protection (GAP) insurance for existing or new auto loans through the credit union. It also offers some discounts on GEICO auto insurance, depending on your state of residence.

Lowlights of Navy Federal Credit Union auto loan

If you don’t have ties to the military, you won’t be able to access Navy Federal Credit Union’s services, including its auto loans.

If you are approved for an auto loan, you must either pick up your check in person at a branch or receive it via mail. There may be a fee associated with mailed loan checks. If you had a co-applicant with a different mailing address, the check and promissory note will be sent to them. Some applicants may find this inconvenient, especially if their co-applicant lives far away.

On the credit union’s website, minimum interest rates are noted in detail for used vehicles, new vehicles, boats, RVs and motorcycles. The website, however, doesn’t note its maximum interest rates or discuss specific credit requirements for auto loan approval. The credit union did not respond to emails requesting this information.

How to apply for a Navy Federal Credit Union auto loan

To apply for an auto loan from Navy Federal Credit Union, you’ll first need to become a member. You can apply at a branch or online, and you won’t be charged an application fee.

Make sure to gather contact information for both you and your co-applicant, if you have one. If you’ve picked out the vehicle you want, you’ll need its 17-character vehicle identification number (VIN), the state where it will be registered, the dealer or seller’s name and the mileage reading on the odometer.

If you don’t have a specific vehicle in mind, you’ll need an estimate of the type, age and price of the vehicle you want to buy, including the warranty, title, tax and license fees minus the down payment. You’ll also need to know about how long of a loan term you’d prefer.

The credit union requires personal information, including employment and income details for both you and your potential co-applicant. It’ll ask for your current housing information, too. The credit union already has identity information about its members, and it’ll base its decision on your credit history, the amount of money you want to borrow and the value of your collateral.

You’ll receive a text or email from the credit union to let you know whether it approved your application. Most applicants get a decision in about five minutes.

The fine print

Navy Federal Credit Union’s website doesn’t indicate whether it charges any additional fees for auto loan borrowers. The only fee mentioned is the one that the credit union may charge to mail a physical check to an applicant or co-applicant, as mentioned above.

Who is a Navy Federal Credit Union auto loan best for?

The credit union is a great option for people with ties to the military who want to work with a credit union that has friendly policies and decent interest rates.

Like many credit unions, this one offers competitive interest rates for those with good credit. Even if you are already a member and know you’ll apply for an auto loan with this lender, it’s still important to shop around for the best rates so you can be sure you are paying the lowest possible amount for access to the money you need to buy a car.

*Rate accurate as of August 22, 2019

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Rachel Morey
Rachel Morey |

Rachel Morey is a writer at MagnifyMoney. You can email Rachel here

Advertiser Disclosure

Auto Loan

Buying a Car: When to Walk Away

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Walk away from car deal
Getty Images

Buying a car can be a stressful experience for anyone. For some of us, the anxiety begins before we start negotiating financing or even step foot onto a car lot. But no matter how eager you are to get the experience over with, or how persistent a salesperson is, you should never buy a car without being certain it’s right for you.Ron Montoya, consumer advice editor for Edmunds, says that dealerships are good at applying pressure. “There’s always a sense of urgency that ‘today is the best day to buy the car,’” he says. “While that may be true for the seller, it’s not always the case for the buyer.”

According to a 2018 Cox Automotive study, you may be tempted to give in to the pressure after spending a whopping three hours at a lot, which is the average amount of time buyers spend. But no matter the circumstance, you should always be prepared to walk away in the presence of red flags.

How do you negotiate in “good faith?”

Like most things in life, a bit of preparation can go a long way. Here are some of the ways you can reduce your risk before approaching a dealership or private seller when buying a car:

Review your budget and credit

Doing your financial homework can help you determine what price range is truly affordable for you, instead of letting a salesperson decide. Loan payment calculators can also help you get a realistic view of affordability by taking interest rates and fees into account.

Get loan preapproval

Another factor in determining affordability is the amount of financing you get approved for. Having a loan preapproval from your bank or credit union, before visiting a dealer, has several benefits: it sets realistic expectations about the maximum sales price you can shop for and helps you avoid more expensive or even potentially predatory dealer financing. If the dealer can beat your preappoved loan offer either through one of its lender partners or through the manufacturer, you’ll know you’re getting the best deal possible.

Research market prices

Montoya, who purchases fleet vehicles for Edmunds, an auto industry research firm which tests cars, says the best way to prepare for a purchase is to understand the market price of the car you want. You can do this by looking up values through sites like Kelley Blue Book or Edmunds, checking out a variety of ads and car-buying websites, and even by getting a few price quotes, so you can compare them to the offers you get from a dealership.

Research promotions

Having a sense of manufacturer and dealer promotions can not only help you narrow down which models to buy and which lots to visit in your area, but it can also help you understand if the dealer is truly offering a “one day only” sale, or if it’s just a tactic to pressure you into buying.

What are the warning signs that you should walk away from a car deal?

Interacting with a salesperson who’s been trained to haggle and close the deal might leave you feeling outwitted. Some level of stress is normal, but these are the real red flags to look out for:

Prices change after your initial negotiations.

For example, your trade-in value is lower than what you discussed or your monthly payments are higher. You should also look out for add-ons you didn’t agree to, like an extended warranty or a “service contract” that increases the overall price tag. Montoya says it should be a deal-breaker when written terms don’t match what you discussed.

The contract isn’t final.

It’s easy to assume that signing a contract means your deal is final, but some dealers include contingencies, including “spot deliveries” that might be “yo-yo transactions” meant to intentionally deceive buyers.

If your contract states, for example, that your financing isn’t final, you may be asked to come back later and get a different loan with worse terms, for the car you’ve already taken home. If the dealer won’t state in writing that your financing is final, they may be breaking the law. This is a definite sign that you should walk away.

You’re being pressured.

Brent Miller, executive director of a community center where musicians work, practice and perform in San Francisco, recently shopped for a new car. Miller says despite visiting a reputable dealership for his purchase, the salesperson repeatedly pushed him to make unwanted decisions. “It was amazing how much pressure there was to sign the contract without reading everything, even before I had a loan offer,” Miller says.

If you’re encouraged to buy a different car than the one you’re shopping for, or to close the deal without looking over the numbers, Montoya says you should walk away.

The seller is withholding information.

It’s a red flag if your salesperson gives unclear information about pricing and loan terms. If you can’t get a straight answer on what your monthly payment will be, the length of your repayment term or your interest rate, you shouldn’t sign a contract. A good tip is to keep your focus on the out-the-door price of the car — if you get the lowest price possible, a good monthly payment should follow.

Discriminatory practices

If you feel a dealer is attempting to take advantage of you based on your citizenship status, income or other factors, you should go elsewhere. One way dealers do this is by marketing to you and conducting negotiations in your first language and then offering you a contract in a different language, with higher fees. Regardless of the circumstances, never sign a contract if you’re unsure what it says.

How to walk away from a car deal

So you’ve attempted to negotiate a deal with no luck, or you’re simply uncomfortable with the transaction. It’s completely within your rights to walk away at any point before, and in some cases even after you sign your contract.

During negotiations

At this point, walking away is as simple as putting one foot in front of the other. Montoya advises that even if the dealer already pulled your credit information, you’re still under no obligation to stay. While you may be concerned about the hit to your credit, know that making multiple auto loan applications within a short period of time will have a small impact on your scores.

If you’re having trouble ending the negotiations, Montoya suggests shutting down persistent salespeople by shifting the blame to someone else, like your spouse…even if you’re not married.

Whatever your explanation, walking away or telling the dealer you’re going to shop around is perfectly acceptable. If you really are interested in buying the car, walking away may also be a useful negotiation tactic.

Once you’ve seen the contract

Regardless of the time and effort invested by both parties, you are under no obligation to sign any contract you’ve been presented. At this point in the process you can still simply say “no” to the dealer.

After signing contract

If you sign a contract and drive away with a car, but then get called back based on a contingency, you may be able to walk away from the deal.

If you’re called back because financing fell through, you can demand to get your down payment back and unwind the entire transaction. To complete the process you’ll need to make sure that the application and contract are cancelled and that you get copies of all the documents.

If, on the other hand, you simply wish to return the car because you’ve changed your mind, your options may be limited. Some state laws may allow you to return your car if you discover it’s a lemon, but contrary to popular belief the “cooling off period” unfortunately doesn’t apply to cars.

In some circumstances you may have a special option to cancel, particularly when it comes to buying used cars. New York state law, for example, gives you a set amount of time to file paperwork and cancel your contract. Your dealer may also have a special clause that gives you time to reconsider and return your vehicle. But if neither your state nor your contract stipulates that you can cancel, your best shot is to ask the dealer to give special consideration to your case.

The bottom line

The best way to avoid a bad deal is to be your own biggest advocate. Educating yourself about market prices, understanding affordability and researching consumer protections in your state, all before you talk to a salesperson, can help you stand up to pressure and recognize red flags quickly.

Ultimately you shouldn’t be afraid to walk away, no matter how difficult the dealer makes it to leave. Both the car and the financing have to work for you. “I want people to buy a car when its right for them and do it on their own time,” says Montoya, “not a dealership’s time.”

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Sarah Brady
Sarah Brady |

Sarah Brady is a writer at MagnifyMoney. You can email Sarah here