NEW CAR FINANCING-KNOWING THE IN’S AND OUT’S
This is where most buyers drop their guard, and leave money on the table when buying a new car. There is a big convenience in financing through the dealer, but that does not mean you have to pay too much in interest charges. The finance department in any new car dealership can submit the loan application for you, and provide you with rates. The problem is that they mark up the interest rate, potentially costing you thousands in extra finance charges. There is nothing wrong with making a little profit for the time and work it takes to get an approval, but we want to limit that to an acceptable level. Just as in any endeavor, being prepared goes a long way to helping you achieve success. If you are prepared when you enter the business office your chances of getting a competitive rate are much higher. Having said that, there are a few things you can do to prepare yourself, and enter “the box” with the confidence of a seasoned car buyer.
1.Know Your Credit Score
This is sometimes referred to as your FICO score, and it is very important that you know what this score is before shopping for a new car. There are a number of credit reporting agencies, but the three largest are Experian, Equifax, and TransUnion. Most dealerships and lending institutions use at least one, if not all, of these agencies to retrieve a customers credit score. The most widely used in the car business is Experian. I suggest getting a credit report before hand and looking it over for any discrepancies that may be present on the report. It is widely regarded as a good idea to get a credit report annually anyway, to monitor your credit for errors and omissions. It can also help you spot identity theft, which is becoming a serious problem for consumers.
Knowing your credit score will go a long way in keeping leverage on your side when shopping for car rates. Often times, car buyers do not know their credit score or think it is actually worse than it is in reality. This leaves the door open for a finance manager to mark up the rate substantially, because the customer believes his or her score is low. The customer believes that this is the only rate they qualify for, so they accept it. This is easily avoidable, just by taking the simple step of getting a copy of your credit report.
2. Get Pre Approved
This will go along way to keeping the business/finance manager on his best behavior and get you a competitive rate. The confidence lies in knowing that you are already pre-approved for your new car. This will allow you to effectively compare the rate you are being offered, and force the finance manager to match or better the rate if he wants you to finance through the dealership. Often times, the online finance companies will offer you great rates knowing they have to be super competitive on new cars to get the business. This will give you the upper hand when entering the office, and in the process keep the interest savings in your pocket where it belongs.