How to Negotiate Your Car Payoff Balance

Car payoff balances are difficult to negotiate.
Image Credit: fizkes/iStock/GettyImages

In general, lenders aren't eager to negotiate your auto loan payoff balance, according to Relay Cars.com. You signed an agreement to pay the borrowed funds back, and the car itself acts as security for it, so there's a built-in limit to the maximum loss the lender will be willing to take.

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You'll have a better chance of success if you offer a lump sum of cash for the payoff balance you negotiate. If you're buying or leasing another vehicle, you might be able to negotiate from a stronger position if the lender wants you new business, and might be able to renegotiate your car loan payoff amount.

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Mention Any Bankruptcy Issues

Often, lenders have no good reason to negotiate your auto loan payoff balance, since they can just repossess the car if you fail to make your payments. Some contracts explicitly state that the lender will not negotiate the payoff balance of a loan.

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To get a lender to negotiate, you should mention you're thinking about filing for bankruptcy if that's the case, recommends Lending Tree. Lenders may not be able to recoup the entire payoff balance in the event that you declare bankruptcy, so they may be more willing to work with you now to mitigate that risk. However, you should not make this threat unless it's a real possibility.

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Your lender can pull your credit report, so if it sees that you have no delinquencies on other accounts or any other indicators that you're unable to meet other obligations, it won't take your bluff seriously.

Stay the Course

Your lender won't make it easy for you to negotiate the payoff, so be persistent. If your initial requests are denied, ask to speak with a supervisor until you find someone who will work with you. You also never want to agree to pay more than you really can afford. Negotiating a settlement that you can't actually pay doesn't do you any good. Part of your renegotiation might include offering a longer payoff time period. You might need to pay more interest, but if you need to buy time, this strategy can help.

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Offer a Lump Sum

Lenders may be more willing to negotiate if they know they'll get an immediate payout. Being able to offer a lump sum of cash is a great bargaining chip. To make the lender feel more at ease, provide a copy of your bank statement that proves you have the cash on hand to cover the amount, or other evidence that indicates you'll be able to back up your offer.

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Make It Official

If you do get the payoff balance you want, the last thing you need is for the lender to renege on the offer. Avoid this by putting the new payoff balance in writing, dating the document and having both parties sign it. Once the payment is made, request written confirmation that the loan has been paid off.

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If possible, talk to an agent over the phone or in-person and see if you can record the conversation. Talk to an attorney to learn what is legal in your state when it comes to one-party consent for recording phone calls or conversations. If you can get a response via email, that will help, as well.

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