Buying a car has come to symbolize the fruition of the American Dream. Almost every teenager just getting into college realizes the crucial importance of a vehicle soon enough and makes monthly payments on his first car loan. While purchasing one’s first car may be an exciting experience for people with means, it is an extremely daunting task for those of us with a sub-par credit history. Repairing your credit history before purchasing a vehicle is an ideal solution, but highly impractical given the time constraints and the vital nature of transportation. A few tips and tricks can go a long way in helping buyers avoid scams.
Don’t be too picky
The process of online auto loan applications is pretty straightforward. The buyer submits an application to a website that conveys the relevant information to all the dealerships in his area. These car dealers forward the buyer’s details to a host of their lenders. In a number of cases, while a buyer may prefer a particular brand (say for example, Ford), the lenders affiliated with the brand may not want to finance his purchase. On the other hand, a lender associated with a different brand dealership (for example, Chevy) may offer to lend the required amount. The buyer is strongly advised to go for the latter brand rather than paying a much higher interest rate for his preferred brand. He is now in a much stronger position to negotiate the deal with the dealer.
Equip yourself with information
Due diligence with regards to the auto loan rates, his credit score and eligibility is the minimum research expected of a first-time buyer. Ignorance about these aspects can be exploited by car dealers. The customer must look into all aspects of the deal, especially the fine-print that could contain hidden ‘gotchas’.
Remedial Steps to take before application
The car loan’s interest rate is inversely proportional to the buyer’s credit score, and anyone hoping to get the best auto loan is advised to repair his credit history to some extent before applying for the loan. Measures like reducing the credit card balances to below 50 percent, paying off higher APR cards first, waiting for a few months after starting a new job etc. go a long way towards favorable consideration for a low interest auto loan. Getting unjustified black marks off your credit report before applying for the loan is highly recommended.
Car Dealers and their scams
The first-time buyer’s ignorance and dented self-esteem (as a result of a bad credit score) are often exploited by slick dealers. He is coaxed into signing up for a number of unnecessary add-ons. A “Subject to Financing” Clause is included in the contract to provide dealers with an excuse to revise the interest rates later on, once the buyer is locked in. Some may even go so far as not paying the amount owed to the lenders of the previous vehicle that was traded in. All these scams have disastrous long-term effects on the buyer’s credit report and could send him into a vicious cycle of debt.
Learn more about WA Car Loans. Stop by the Auto Loans Spot site where you can find out all about getting the best Auto Loans.