Posts tagged ‘buying a new car’

Don’t be Taken for Ride When Buying a Car

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Buying a car is a big purchase. The whole process can be quite intimidating. So, before the bright lights and dazzling salesmen get a hold of you, follow a few simple steps to help you get the deal that is right for you.

1. Make sure you know what you want

Sounds like a no-brainer, but many people think they know, until they see all of the options available. And many times what you want is not what you need or what you can afford!

2. Know how much you can comfortably afford

Sit down and draw up a budget before you start shopping. Make sure to include the cost of insurance, taxes and maintenance. Getting a

Pros and Cons of Auto Financing

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What is the importance of the financing and insurance room?

Con #1: Some people ignore the financing and insurance room.

Car buyers have their mind on one thing

Bailout Offers Auto Loan Relief

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If you have less than stellar credit GMAC has a deal for you.

At the start of the Great Recession, General Motors and Chrysler were in desperate need of a federal bailout. GM made best use of the Troubled Asset Relief funds the government made available to them by passing savings on to customers. At the beginning of 2008 few buyers were willing to plunk down money for a new GM vehicle. The few who did had credit ratings that were less than excellent making them too high a risk for GMAC the financing arm of General Motors. The manufacturer made this money available to consumers in the form of an improved loan structure. They lowered their minimum credit score requirement making more loans available to more buyers.

Credit Scores

As the recession took hold GMAC was forced to increase its credit score requirement from 621 to 700, which made buying a new car an option only for a select few consumers. The release of two federal bailout packages freed up enough capital that GMAC was able to reduce their credit rating requirement to the heretofore mentioned 621.

GMAC President Bill Muir said, “We will continue to employ responsible credit standards, but will be able to relax the constraints we put in place a few months ago due to the credit crisis. We will immediately put our renewed access to capital to use to facilitate the purchase of cars and trucks in the U.S.”

Zero Interest

GMAC did not stop there in its effort to finance more cars, however. They also started a very aggressive zero percent interest auto loan promotion that ran for a full week. Despite this effort year over year sales were still down more than 22 percent, but this was not as bad as they anticipated before the zero percent interest deal was offered.

Now, if your credit rating is just 621 or higher you can take a share of the federal bailout money used to support the American automotive industry.

The Troubled Asset Relief fund money was released in October of 2009. As result of this, GMAC received $6 billion to be used to support the industry. By offering low interest financing options and reducing its credit rating requirement GMAC made its best attempts to encourage automobile buying and restore the industry.

“A” for Effort

Their efforts were among the best efforts to restore some calm to the troubled automotive sales market. It also served to restore confidence in the American car buying consumer by making the purchase of a new car a little bit easier for everyone.

Should I Get My Own Financing?

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Every good shopper knows the importance of comparing prices before you buy anything. The same rule applies to buying a new car. In fact, with prices as high as they are and interest rates going up, now it is even more important to shop around for the best rate on everything.

If you can get your own financing deal, do it

The best way to secure your own financing is to check your credit report for errors and get a copy of your credit score. Keep this with you at all times.
Lenders will want to know your credit score before they can give you a quote on financing terms. The dealership too will want to know your credit score before making any sort of financing offer.

Getting your own financing deal is all about saving money in the long run. Banks and lenders of all sorts are in business to make money and they make money in a number of ways. If you are not a savvy shopper they will try to make as much money as they can from you, but you have control. Keep a good credit record, pay your bills on time and avoid bankruptcy and you will have a pretty good credit score. This is an important step toward securing a good loan.

Dealerships will want to arrange financing for you

Dealerships make financing available to their customers because they can make more money this way. In fact, after you negotiate the price of your car the financing person, who is paid on commission, will try to sell you a number of things you likely do not want, did not ask for and do not need.

Undercoating body spray for one, is a great way for the dealership to make a little extra money off your car purchase. So is the addition of a security system, a new stereo and navigation system. An extended warranty is another great excuse for them tack a little extra on to the cost of your vehicle. Before you know it they have increased the price of your new car by a few thousand dollars, all of which they will gladly provide financing for.

Shopping for your own financing deal is a way of self-preservation

Don’t let the dealer take advantage of you by being your sole banking representative. They are looking to make a profit, nothing wrong with that. You need to be looking to protect your investment, and there is nothing wrong with that.

Do yourself a favor, next time you are in the market for a new car, get your own financing. Then when you walk onto the lot you will know how much new car you can afford and relax knowing it is already paid. All you have to do is decided which one you want.