We had an outstanding response to our last show, when we interviewed an experienced insider from an Auto dealership. We received lots of emails as well one special call I have to tell you about. A girl called in and she was at a car dealer ship, trying to negotiate a deal. The finance department was quoting her a pretty high payment she felt was unfair.
We quickly checked her credit and were able to tell her that she only had two late payments and based on her score she should not pay the rate they were charging. She qualified for a much lower rate and she went right in and changed the whole deal around in her favor. What a great feeling to make that kind of difference in someone's life.
More and more we realize that having and using credit is a NECESSITY not a luxury. The credit reporting bureaus have good news and bad news. The bad news is Fico says that 43.5 million Americans have a credit score of 599 or less. The good news is recent figures show more Americans are raising their scores over 720. It's all in how well you know and use the system.
It is worth the small investment of your time and money to get the professional help you need to get control now. Do not be embarrassed, you need to have credit, it's no longer a luxury. In the current market getting prepared early will pay off big time in the long run.
Right now it's very difficult to get a loan or a new credit card. In two or three years from now when the banks start lending again, will you be getting offers for the best rates, or will you be scrambling around to start fixing up your scores?
These are a few things you can do now to improve your scores
- Add trade lines
- Get a secured credit card, use it responsibly.
- Do not pay your whole balance off each month. Credit is based on the use and repayment of credit.
- pay your bills on time
Open Season on Car Buyers
Under the new consumer protection laws, car dealerships are exempt from the same oversight as the banks and credit unions. Because of this, you the consumer have become an even larger target than before. The car dealerships do not have to comply with new lending industry reforms and guidelines. Since they provide the largest percentage of loans, how “protected” are consumers? We put together four basic things that you can do to protect your self and get the best possible deal.
Four things you should do before stepping into the showroom …
- Review your credit report.
We can look over your report even if you have good credit, and give you an idea of what you can qualify for before you go in. You'll have a better handle on how much your payment should be and how much you can afford.
- Apply for credit from a credit union or local bank.
Get pre-approved. Community banks and credit Unions can be very competitive on interest rates, and it may get the dealership to try to beat the rate you walked in with.
Our insider said the sales team loves it when a customer comes n with pre approved financing. It shows that they are serious customer ready to purchase a vehicle.
The finance department is not usually so happy because they have to approach the whole deal in a different way. If the consumer is strong and prepared then they control the deal. ”
- Set your own limits on borrowing
Do not get talked into anything longer than four year loan
Keep payment down to 10% of your income.
- Say no to yo-yo financing.
Get an approval slip! Make sure the loan is really approved before you go drive off in your car and leave your trade in behind. Never buy on “condition of financial approval.”
What can happen is the financing can fall through. The dealership will call a few days after the sale and say that and you were not approved. Then they say they can get you financing but it's going to cost more.
If you can not afford the new offer, you may want to reverse the deal. But guess what? Your trade in was already sold so now you're out two cars with no recourse. So be careful with your financing and be sure it's a done deal!
You may choose to explore the option of leasing. It can be a good way to still get to drive a new car without the expense. If you do decide to lease, do not sign a lease lasting longer than 36 months. Leases usually come with a great warranty and maintenance program. It is less expensive, just watch that you do not go over the mileage limit for your particular agreement.
Buying a pre owned vehicle is a totally different process. No two pre owned cars are the same. The auto industry insider that we interviewed recommended taking a look at the different certified cars on the market. “Certified” means that they are pre owned but they offer a warranty from the car maker and are inspected thoroughly before being resold.
Shopping on line takes some of the emotion out of the process and eliminates the sensory overload that happens when you go to a showroom and sit in, or drive different vehicles. You should narrow down your search and only test drive your top three choices.
Take the stress out of buying a car. Have the proper financial tools and information in hand before you head out to a dealership! Use the internet to shop for cars, reputable dealerships, the lowest rates and alternate lenders. Get your financing pre approved, get the best deal!