Want a Lower Interest Rate on Your Car Loan?
Clinching The Best Deal - Lower Interest Rates
Andrina James
by Andrina James
December 4, 2007
Planning to apply for car loans? What will be the monthly payments? What about the down payment? What would be the operative interest rates? Interest rates can either save or cost you thousands of dollars. Hence these FAQs have to be answered before going ahead with the car loans.
Online Calculations
There are online car loans calculator available to determine the loan amount, term of repayment and the interest rates. The prospective buyer should compare different principal amounts, interest rates, and numbers of years to find an affordable monthly payment. This would be helpful in choosing the desired car type at a suitable rate.
FICO Score And Car Loans
If a car loan is planned, the buyer should avoid any other loan for the next 6 months to one year, as the FICO would go down. Every time a loan is applied, and each time a loan request is made, the FICO score suffers. Higher FICO scores lead to lower interest rates.
Credit Report From Credit Bureaus
FICO scores can be obtained from the credit bureaus (Equifax, Experian and TransUnion). Lenders fix the interest rate based on these credit reports. The information in the report should be accurate. Any incorrect information in the report should be informed to the bureaus immediately.
Negative Credit Information And Bankruptcy
The surety of repaying the amount by the buyer would certainly lead to better interest rates. Yet, negative information and previous instances of bankruptcy car loan will lead to disproval of car loans, or might end up in a higher interest rate. Still, don’t worry for there are also dealerships that help irrespective of bad credit by providing no credit auto loan.
Insurance Coverage
Whenever the car is damaged, insurance can get the money back, provided the lender has given a full insurance coverage. This helps you to save money as you do not have to spend money on repairing a car which is of no use. The insurance details can be obtained from the car insurance company with the details of the car such as year, make, and model of the car.
Hidden Charges
The automobile loan should be manageable along with other debt repayments. The car would involve not only the interest and car price but also overhead charges, which will be a surprise to the customer if he is not prepared. Hence it is always advisable to keep some money in stored in the kitty while buying a car. Affordability to repay should be the deciding factor before going in for car loans.
The interest rates can either save or cost thousands of dollars. Higher Fair Issac & Co score (FICO) makes lower interest on car loans. Multiple requests for credit and previous credits are to be avoided before applying for car loans. A secured loan will definitely end up in lower interest rates though it cannot be got for no credit auto loan or a bankruptcy car loan.
""Auto Loan Application"
source: http://www.americanchronicle.com/articles/viewArticle.asp?articleID=44687
Used Car Shopping
Used Car Shopping After Bankruptcy
Having the ability to go out and buy something after knowing that you have bankruptcy lingering over your head for many years is really a hard thing to imagine being able to accomplish. If you have filed for bankruptcy and are thinking things like this then you should get online and get to talking with some people that have had to file bankruptcy before, I bet they can fill you in on some things that might give you that little bit of hope that you are needing.
When you are first beginning your journey of regaining your credit so that you can purchase a used car perhaps, there are some things to keep in mind. Make sure that you have done everything necessary in establishing a good credit rating. Do not even think about going out used car shopping until you are almost 100% certain that you will stand a chance in having the ability to get a loan for a vehicle, otherwise do not bother, it may take longer than you had hoped. If you know that you are in good standings then it may be time to get up off the couch, stop sulking over things and get to shopping for that used car you have been waiting for!
Once you have decided that you are ready to take that plunge and you are wanting to go used car shopping, then you will need to think about one more thing. You will then need to determine if you are going to attempt on financing through the dealership or through an outside financing company. This is only if you even can get approved in the first place.
After filing for bankruptcy the best way to go about getting a loan for a used car would probably be through an outside financing company, however, it truly just depends on the situation, the prices and if the dealership may offer something you can afford, if you are approved. Making sure that you choose the proper way of financing the used car is very important, it could mean a huge difference in how much money you can expect to be out for all kinds of different interest charges and fees.
If you can get approved through the dealership, you will then have the opportunity in speaking with the used car salesman, you should remember that it is always about the right kind of negotiating and whether or not it is your lucky day really. However, if you were able to go through an outside financing company then your worries about having to negotiate should be much less. Either way it goes, whomever you have to do the dealing with, it is all about proving that you have the ability in keeping these payments made, and for a long period of time. If you have taken all of the proper steps in improving your credit score prior to attempting to purchase a used car then you should really have no worries, the proof is in the pudding, so to speak. Good Luck!
Building Your Credit Wisely
Using a credit card wisely is an important step in building a good credit rating. If you're trying to re-build your credit or if you're young and just starting out, pay close attention the next time you receive a new card offer in the mail. When you're trying to build a positive credit history for yourself, using the right credit card makes sense. Making small purchases and then making your payments on time each month is a simple, reliable way to build an outstanding credit report.
What to Look For On a Credit Card Application
If you receive a credit card application that appears to offer a low monthly interest rate, don't make a decision until you turn it over and closely examine the Disclosure Box. In it you'll find a more important measure of credit terms - the Annual Percentage Rate, or APR. By federal law, the Disclosure Box will also tell you whether or not the card has what is called a grace period - a number of days, usually 25, until your purchase starts to accrue finance charges. If a card has a reasonable grace period and you pay off your balance at the end of each billing cycle, you won't have to pay finance charges. It isn't difficult to find credit cards that offer these grace periods, so if the Disclosure Box doesn't declare one then throw the application in the trash and look for a better offer.
If you don't have any credit history at all, a credit card company won't want to give you a very high credit limit, but that's probably best when you're just starting out. You don't want to be tempted to go into serious debt with your very first credit card.
Calculate Your Monthly Finance Charges
Ideally you want to pay off your balance each month to avoid paying any finance charges, but when that isn't possible it's important to know the actual cost of the items you purchase. The annual percentage rate, divided by 12 months, gives you the periodic rate that will be applied to your outstanding balance each month. You can estimate what your monthly finance charge will be by multiplying the periodic rate times the outstanding balance. It may sound complicated at first, but taking the time to learn this simple equation can make a big difference in how you use your credit card.
When you're able to see how much you actually spend on an item that you don't pay off at the end of the month, it might help you to resist the temptation to over-use your card. An item that you want to buy might be on sale at the time you purchase it, but if you don't pay off your balance at the end of the month then those finance charges can dramatically increase the actual amount you'll end up paying.
Use Your Credit Card as a Tool
Credit cards are only one of the tools available to help you build a positive credit history. Making on-time payments for other forms of credit, such as rent and utilities, are also important. Depending on your situation, within 1-2 years your credit rating will be improved enough that you no longer need to use your card for new purchases to maintain your good credit. Use these tools wisely, and they'll help build your financial future!
Car Dealer's Auto Sales Tactics
If you are considering purchasing a new car or truck (this applies to used vehicles also), you should be aware of a few things about the salesperson you are about to encounter. To get the sale and maximize profit, auto dealerships teach their sales force some variation of the "10 steps to the sale". This will help you to be prepared for your next dealership experience.
The belief is that the steps to the sale are always the same and that as a salesperson you cannot skip a step or take shortcuts. If the salesperson finds that he or she is stuck on a particular step and can't get you to move on to the next one, they will most likely make a "turn". That is, turn you over to another person. The idea being that a fresh face or different personality will be able to move you on to the next step. A turn is not always a bad thing. You may truly dislike the person you are working with to the point of being unable to purchase the vehicle you actually want.
Let’s take a look at steps 1-3:
1) Meet and greet - First impressions are important. A clean cut and neatly dressed salesperson should introduce him or her self with enthusiasm and a smile. For example, "Hi, my name is Bill. Welcome to ABC Motors. And your name is?" This step is obvious and you should expect no less. But if your first impression of the salesperson is negative you will probably not be purchasing a vehicle from this person. Would you buy a car from a guy with slicked back hair who is wearing sunglasses and smoking a cigarette? Probably not!
Most customers will inform their salesperson at the time of the meet and greet that "I'm only looking" or I'm not buying today". A good sales representative will assume that what you are really saying is, "I'm looking for the best deal and someone who I feel good about buying a car from!" In many cases this is true. But if your intent is only to gather information then don't get caught up in the moment and lose sight of your objective.
2) Building Rapport - Here the salesperson is trying to earn your trust and to sell him or her self to you the client. They might engage you in small talk in an attempt to find common ground. Maybe ask you about your family or notice a bumper sticker on your car and use that as a starting place for a conversation.
Of course, all the time they are trying to get into your head. You should be aware of the implications if what you are saying as it relates to the sales process. The salesperson wants to understand your personality type and discover what motivates you so that you can be moved successfully through the sales process. This is, in a way, part of the qualifying process, (step 4) which will be covered extensively in the next part of this series.
3) Sell the Dealership - The purpose here is obvious. To convince you that this is the best place to make your purchase and of course have your vehicle serviced in the future. You might hear something like, "It was really smart of you to come here. Most people shop all over town but eventually end up here". Don't allow your ego to be pumped up with garbage like this. Maintain your objectivity!
Some very good salespeople will actually go so far as to give you a guided tour of the facility and introduce you to the parts and service departments before you actually purchase a vehicle. This is an excellent tactic and really is a service to you also. From the point of view of the salesperson it is part of "assuming the sale" and on the client side you get a good overview of the place you may be doing business with for years to come if you do end up purchasing a vehicle there.
Auto Loan Scams
Car dealers are often portrayed as predators just waiting for an unsuspecting customer to come along. This is because many people believe that they are always on the prowl for unsuspecting buyers that are not very knowledgeable about cars. This can be unfair because we can argue that there are car dealers out there who would not cheat just to get an extra profit.
How do you tell the difference?
To avoid becoming a victim of sneaky car dealers, look at the following auto financing scams.
Yoyo scam
You will be allowed by the dealer to bring the car home as soon as possible. The dealer will take care of the financing, a few days later he will contact you again and tell you that there was a problem with your financing plan. He will tell you to set up a new financing scheme through him which, of course, will be at a higher cost and this will also entail a very high profit on the dealer's part.
Be wary of this trick and avoid it at all costs if you detect it. If you have a bad credit standing, don't have your financing done by the dealer and make arrangements for your own financing. If you ever do avail of the dealer's financing, you should never drive the car back to your home immediately. Wait for at least 24 hours just to make sure that the processing of your financing scheme has been completed already. By allowing 1 whole day to pass by, you are assured that the dealer cannot use this scam on you.
Window etching trick
Window etching is a very common scam. What the dealer will do is to offer to etch the VIN number of your car onto the window of the car for a price. Basically, the price ranges from as low as $300 to as high as $1,000. Some buyers think that they did a good job by being able to talk down the price to a few hundred dollars, but unfortunately for them, a few hundred dollars is still a good amount of money. The best way to avoid this kind of scam is for you to buy an etching kit that you can do on your own. This is available in most auto shops and costs around $20. See how much they profit from you!
Preparation fees
For preparing your car, the dealer will often add an additional preparation fee to your bill. Just to conduct a test drive, replace fuses, or take the car's plastic cover off will have your bill increasing by at least $500! If you visit other shops, you can get the information that these add on costs are already included in the MSRP as set by the manufacturer. Some dealers automatically add it to the buyer's order to make it look mandatory. To take care of this scam, you can ask the dealer to classify it as credit (it should be identical to the amount of the preparation fee) on the following line. If the dealer does not agree to this, you can just simply walk away from the dealership.
Market adjustment
The dealer will convince you that the vehicle you want is selling like hot cakes and very popular. In order to sell you the vehicle, they will do some "market adjustments" amounting to a few thousand dollars. This is usually indicated by a tag near the MSRP tag set by the manufacturer. Even if the car you want is very popular and is very much in demand, if it is in stock you should not be tempted because getting a "popular" car is not worth it if you have to pay a few thousand dollars more. You should never pay more than the MSRP set by the manufacturers. If you do, then you are allowing others to take advantage of you.
Warranty extension
Although this type of scam is old already, it is still being used and there are many who fall for this trick. What happens in this kind of scam is that when you make a loan for the car, the dealer will tell you that you are required to purchase an extended warranty because it is one of the conditions of the bank. There is a simple way of avoiding this scam. Ask the dealer to specify clearly in writing that the extended warranty is required for the loan to be approved. The dealer will most probably find a way to have it excluded. If he persists in including the extended warranty, do not do business with this guy and go to other dealerships.
These are some of the most common auto financing scams that are utilized by some car dealers. Always keep these in mind if you are going to buy a car. If you or a friend were treated fairly by a dealer in the past, consider using the same dealership again. It’s a good indication that they do care about their customers and aren’t just looking for a “fast buck.”
Think very carefully and do not buy on impulse. Good luck to you and go get that car!
Is An Auto Loan for You?
The automobile is certainly a wonder of twentieth century technology. It has made its place in our American history. Though not as well known, a whole industry had to be created to effectively market this fairly expensive luxury to the general public.
The franchise system was used to lock in big profits for the auto manufacturers. Your local Ford or Chevrolet dealership is part of this system. If you want to buy a new Ford or Chevy you have to buy it from one of these dealerships.
The automobile dealership is basically a franchise granted to a car dealer by the manufacturer. These dealerships are exclusive franchises. This gives the car dealer many marketing advantages. Car dealers will use their proprietary knowledge to inflate the cost of your car purchase. Certain marketing practices could potentially cost you hundreds, even thousands of dollars that you shouldn't pay.
Although the car dealer may be reputable, the industry of car sales has adopted selling methods, practices and techniques that cause unsuspecting car buyers to pay more than they should for a new automobile.
These front-end charges are unnecessary and should be avoided:
Car Buyer Mistake #1 --
If you are charged a large amount of money for "set-up and prep charges", then beware. The truth of the matter is that the car was inspected before it left the manufacturer. The car was insured in transport to the dealer and if there was any damage during transport, that would have been paid by the trucking company. The total preparation to sell you the car really amounts to a quick car wash. Prep charges can run up to $800. You should pay nothing for any prep charges.
Trade-in Trickery --
Dealers hate to take trade-ins. They either have to sell them on their own lot or dump them at a car auction. It generally costs a dealer $600 to handle your trade-in. The dealer will pass this cost along to you. And even though the salesman says he can get you "top dollar" on your trade-in, you are really only getting the amount the dealer knows that he can sell the car for at an auction.
There are also other questionable charges that occur at the back-end of a car sale. You can avoid losing hundreds of dollars by being aware of these dealer tactics to make more money.
Dealer Periodic Maintenance:
Don't fall for this one. The dealer will charge you $40 per hour or more for every scheduled visit back to the dealer. You can get the same quality of service at Jiffy Lube for $20. The dealer is simply trying to assure more business for his dealership by selling you this option after you purchase your new car. If your car ever needs to be fixed, you may want to have the work done somewhere else anyway.
Vehicle Undercoating:
Even though the dealer might insist that you need this option, the truth is that the body of the car will begin to rust before the undercarriage will. Unless you plan to keep the car past 5 years, and you live near a coastal area, you can skip the undercoating and save $200 or more. All cars have a protective coating on the underside of the vehicle included standard anyway.
Credit Life and Disability Insurance:
You will be offered this insurance if you finance your car through the dealer. It seems like a good deal. It pays off the car if you become disabled or die. And you can just add it to the monthly payments, right? Yes, but don't buy this either. The total cost of this insurance will run you $1000 over the life of the loan. Save your money.
And always get your car loan from the bank, not the dealer. This will give you confidence when you walk into a dealership knowing that you are already pre-approved for the car of your choice. Don't buy a car just because of a rebate or low interest incentive either. These don't really save you all that much and you can pay less for the car you really want by knowing the following information about car dealerships:
The dealer's markup on a new car is between 18%-20%. This little bit of information will allow you to save money because you will know what the dealer actually paid for the car. You can negotiate a better price when armed with this information.
If you do buy a brand new car, expect the car to depreciate immediately by 20% when you drive it off the dealer's lot. This is because it is now a used car.
In the next year, your car will depreciate by another 10%. The second year it will have depreciated another 20%. So if you buy a 2 year old car in good shape and have it checked out by a certified mechanic before you buy it, you can save up to 50%.
These are tips that could save you or someone in your family a lot of money on your next car. Be a wise consumer. Always ask questions and know your options. It's the best way to keep more of your money.
