Making the Purchase

MAKING THE PURCHASE

When you’re getting ready to buy, there are a couple more points to consider…

1.       Do you like the sales person?

When deciding whether to buy your car, consider whether you like your sales person.  Purchasing a car is the perfect time to whip out your first impression skills.  If you don’t like the impression they give you, move on to another sales person or dealer.

2.       Avoid sales pressure!

Make sure the car is right for you!  If you’re torn between a certain make and model, feel free to go to the other dealership to look at the other car.  Don’t be pressured into buying a car on your first visit.  Remember, you want to do business with a sales person who wants to cater to your requests and has your best interest!

3.       Do the price, payment, and terms fit your budget?

Purchasing a vehicle is a big commitment.   Be sure to select a car and payment that fits your budget.  We would never want our customers to ruin their credit score by going into debt after purchasing their car.

4.       Decide if you will trade in your current car

After researching what your car is worth, have an idea of how much you would like to get for it. Knowing what the fair price would be for your trade is important.  Some dealerships inflate the trade value to mislead you and make you think you are getting a better deal for your trade.  But in actuality, they are adding that extra amount that they are “giving” to you to the purchase price of your new vehicle.

Also remember that the value of your trade-in should never change according to the vehicle you want to buy.

5.       What is the MSRP (“market value”) of the vehicle?

Be sure that the price of the vehicle you are buying is at a fair price.  Get the bottom-line price without haggling back and forth!

6.       How much money should you put down?

The amount of money you put down will affect your payments.  Ask your sales rep for clarification on the payments.

7.       You don’t have to buy a vehicle at your first visit to the dealer. 

Know your exit strategy so that you don’t make any quick decisions that you feel pressured to make.  SHOP WHERE YOU ARE TREATED THE BEST AND GET THE MOST INFORMATION.

 

 

6 Keys to Improving your Credit Score

6 KEYS TO IMPROVING YOUR CREDIT SCORE

1.      Never miss a payment (can save you up to 160pts!)

This is the easiest way to kill your credit.  If remembering to pay your bill is your problem, ask your credit card company about signing up for their automatic bill pay program.  If you cannot financially pay your bill, talk to the credit card company about setting up a payment program.  Also be sure to stop purchasing things with your credit card, and set up a strict budget to outline your spending and to plan your credit card payments.

2.      Instead of getting a new credit card, extend your credit limit on cards you already have

If you are someone who is likely to be tempted to go on a shopping spree if you were given a new credit card, then entirely avoid getting a new credit card!  Instead, extend your credit limit on the cards you already have.  And remember: now that you have more credit available after extending your credit limit, this does not mean you can, or should, buy on that additional credit!  Instead, reserve that amount for any emergencies that may come up (e.g., a home or car repair, a doctor bill).

3.      Never use more than 20% of your Available Credit

Not only does keeping your spending down help you avoid paying interest in the long run, but keeping spending down also shows that you have extra credit available.  This could help you get approved for a loan faster down the road and also qualify you for a lower interest rate in the future!

4.      Get credit cards that have cash back rewards to contribute to your balance

Cards that have a cash back rewards program are very helpful. As long as you responsibly purchase only necessary items with your credit card, you are essentially being rewarded for shopping!  Your cash back rewards can be put towards your balance, which helps you pay off your bills.  But again, be very careful!! A cash back rewards bonus can make it very easy to start spending just to increase your cash back rewards.  So be cautious

5.      Finance a vehicle (or any big ticket item)

Making payments on a large priced item shows that you are able to manage and pay off debt.  Financing your purchase for as long as possible will also help, as it shows that you can pay off a long term debt.  This way will make you pay more in interest, but you will have lower monthly payments and increase your credit score.

6.      Take out a small personal loan and repay it over a year on time

This is a great way to boost your credit score.  It shows banks and loan companies that you are able to pay off a loan, too, which can help you get approved for a loan with a lower interest rate down the road.

Credit Cards: Are they good or bad?

CREDIT CARDS: ARE THEY GOOD OR BAD?

The average American carries 3.5 credit cards.  While experts agree that having a large amount can be one of the easiest ways to rack up debt, they also note that there is no right or wrong regarding how many credit cards any one individual should have.

Credit cards can be wonderful: they can build your credit score, give you rewards points, and qualify you for warranties and other bonuses.  However these benefits are only truly beneficial when you pay off most, if not all, of your balance every month. The moment you neglect to make a payment on your credit card, credit cards become extremely horrible. Not only do you start owing more because of interest rates, but your interest rate can go up! Not making payments lowers your credit score.

What about store credit cards?  Applying for a store credit card is especially tempting when they promise 10, 15, or 20 percent off of your purchase.  But experts say that when you apply for a store credit card, 20 points are taken off of your credit score. So, if you really must, limit yourself to one store credit card, perhaps to a store you shop at frequently.

Paying Off Your Debt

PAYING OFF YOUR DEBT
80% of Americans are in debt, and the average person has 3.5 credit cards.  With debt in multiple places, it can be discouraging to begin paying everything off.

If you have multiple debts, start by listing each credit card account that you have.  Next to each account, write its interest rate, outstanding balance, payment due date, credit limit, and the minimum payment due.  This list provides you with the big picture of your debt.

Now that you’re aware of each of your debts, focus on one debt at a time.  Start with the one you owe the least on, and apply whatever you can to that single debt until it is paid in full. It is important to pay more than the minimum payment if you are able to.  This will keep you from paying more in the long run since credit companies collect interest on the remaining money you owe.  (Don’t forget to make minimum payments on all other cards at the same time!)

Next, prepare a budget that takes into account your monthly income, bills, and other expenses.  Keeping track of your purchases can help highlight unnecessary spending. To keep better track of your purchases, try online bill pay.  Enrolling in online bill pay helps to organize your payments, dates, and transactions.  Automatic bill pay also eliminates worry of missed payments. Some online bill pay sites track the categories that you spend most of your money on.  These trends can help you both understand your spending habits and set the best budget for yourself.

Check Your Credit Report

CHECK YOUR CREDIT REPORT
You may be unaware of missed bills or other payments, so checking your credit report may make you aware of missed payments or other problems that you can improve on.  It can also reveal some things that aren’t meant to be on there, such as errors by banks or credit institutions.

There are 3 credit reporting agencies (Equifax, Experian, and TransUnion), and each is required by federal law to provide a free credit report once per year. You can submit for your free credit report by visiting AnnualCreditReport.com or by calling 877-322-8228.

Look over your report carefully. There are a couple things you can look for:

  • Late or overdue payments that are listed that you might be able to prove that you actually paid
  • Is there another name or address listed under your name?  Only your name should be listed on the credit report.  If there is anyone else, you might be the target of identity theft.

If there is incorrect information on your credit report, you must notify both the credit bureau and the information provider (i.e., wherever you got your credit report from).  Include copies of any documents that may support your claim (cancelled checks, statements), but be sure to keep the originals for your records.  Send your credit dispute by certified mail with return receipt requested.  The investigation will take about 30 days, and you will receive notification of the results of the investigation. If the credit bureau finds that there was, in fact, incorrect information on your report, you should be sure to contact the other 2 credit bureaus to make sure your report is updated with the correct information.

Conflicting Credit Scores

CONFLICTING CREDIT SCORES

Conflicting Credit Scores
QUESTION: For several years I have been signed up for a credit monitoring tool so that I can keep track of my credit. I was recently very surprised when I went into a dealership and I found out that the credit score they told me I have was different than what my credit monitoring tool said I had. Why is my score different?

ANSWER: When you are talking about your “credit” you are really referring to the financial history and information about you that is recorded within the three main credit bureaus.  They are: Experian, TransUnion and Equifax.  Generally the information is the same between all 3 bureaus, but what many people don’t understand is that lenders don’t all look at this history the same way. Whether you are talking about a home loan or an auto loan, each of these industries uses different criteria and assigns different weight to the data within your credit history.

For example, a customer that recently visited us found out that his score pulled by the dealership was actually 100 points lower than his credit monitoring tool. This was because the criteria used for purchasing an automobile was different than the criteria that was being used by his credit monitoring tool. While the credit monitoring programs that exist are wonderful for monitoring issues such as identity theft, it is important to realize that the score they assign to you will not always be the same if you decide to take a loan for a large purchase.

Businesses that make financial assumptions each use different methods or ways to evaluate your credibility as a person (your “credit worthiness”) and some lenders may not care as much about specific transactions or types of activity on your credit report as other lenders do. If you have concerns about what information was used by a lender to determine your credit score, a great tool take note of is the “risk based price notice” form that should be given to you by any dealership that pulls your credit.

If you ever feel that your credit history contains erroneous or inaccurate information, it is very important to get it corrected. Remember, a better credit score can have the potential to save you thousands of dollars in interest. For examples of how credit score can affect your finances, read more at www.ineedcarfinancing.com.

Unestablished Credit

UNESTABLISHED CREDIT

Question: I am 22 years old and have recently landed my first job out of college, I want to purchase a new car and know I will need financing. During my first few trips to various dealerships I have been told that I have a very low credit score. I have no idea why my credit score is low because I have never taken out a loan before and always pay my bills on time. How can I improve my credit score?

ANSWER: Many people face this same situation in which they are told they have low credit upon investing in their first large purchase such as a vehicle or house. One of the reasons you are having a hard time is not because you don’t pay your bills on time, it is actually because you just don’t have enough credit history established; we call this unestablished credit. The most important thing to understand is that good credit does not just magically happen, it must be built. Unestablished credit is very common amongst recent grads and there are in fact specific programs that are available to students within 6 months of graduating and help students receive good deals and good rates even without a cosigner. Many new car manufacturers have these programs and they are often called “new grad incentives”. Having unestablished credit is much better than redeeming oneself from bad credit, so you are in good shape. The fastest way to build credit is to open a credit card and use it! The more frequently purchases are charged AND paid off on time, the better. A second good way to build credit is to raise the limit on existing credit cards, this alone makes us appear more credible to lenders. The idea of “holding credit” is basically being credible or trustworthy with money. If the credit card company trusts you with a larger sum of their money, so will the auto lender. So talk to the bank and see if any of your credit cards can be raised to a higher spending limit, just doing that should improve your credit score automatically. When you do take out a loan be smart about it. If this is your first loan, it is important to make sure you are able to make the payments now and in the future. One mistake many people make is not considering their changing lifestyles and unexpected expenses when deciding exactly what they can afford. Remember if you can pay this first loan off successfully you will be well on your way to establishing excellent credit.

If You Have Car Financing Questions, I Have Answers

Hi everyone! This is my first posting for ineedcarfinancing.com. In the coming weeks and months you will start to see more topics posted on this page. Although I am based in Tucson, Arizona, the advice and content provided on this site will be applicable to anyone that is looking to learn about how to be a better car shopper.

With That said, thank you for visiting and sending me your car buying questions.