Do’s & Don’t’s
Do - Get a copy of your credit report. You cannot go to battle totally unprepared!
Do - appear confident and do not let a car dealer cow you by complaining about your credit. This is the same strategy as pointing out any dents or dings on your trade-in. These tactics are designed to get you to pay more or negotiate less.
Don’t NEVER drive off the lot with a car until your financing terms are finalized, approved by everyone and SIGNED by all parties. Dealers love to pull this old sales trick – and it works like magic and makes them richer and you poorer.
How this trick (scam!) works:
A shady dealer will encourage you to leave the lot with a contract that isn’t finalize or is missing some one person’s signature. In this unethical ruse, you may be asked to sign a financing agreement “subject to final approval” rather than a binding ‘done’ deal. The smiling car salesman/dealer lets you take the car home as if it were a finalized and binding agreement.
You drive off in your new car – and you really start to fall in love with it – we all do! But wait… your phone rings the next day, and it’s the dealer/salesman calling to inform you that the financing was not approved. You must bring the car back to the dealer and are then hit with a much higher interest rate than you had been promised and originally expected. Of course, it is all YOUR FAULT (according to the dealer) because your credit was not as good as you said it was or as it should be.
Don’t fall for this. They were happy to see you take this car off the lot and are trying to suck more money out of you. Hand them back the keys and start to simply walk away. The phone will probably ring again not long after saying that they manager pulled some strings at the bank and come back to get the car… hopefully, you had visited another more honest dealer since this occurred and no longer want the car they hucksters were trying to make you overpay for.
Do:
- Know the market. Shop around. Kick some tires, not just on cars, but on interest rates and financing agreements. Since you know your credit score, you can easily find out under what terms you can borrow for a car.
- Skip the extras. Don’t sign up for add-ons like extended warranties, GAP insurance or credit life policies.Those are just ways for dealers to suck more money out of you for things you simply do not need. You need a car, then just buy a car. Leave it at that.
- Watch out for penalties. Check to see if there is a prepayment penalty written into your contract.
If your credit is so bad that it is almost impossible to get a loan anywhere…
If you have really ruined your credit, then you are probably going to have to take almost whatever deal you are offered – and DON’T SCREW IT UP!
Face it, if you are a bad risk, it will cost you to buy on credit. Many institutions will not lend to you, but you can always find someone willing to take a chance, especially with automobile credit. Lots are brimming with stock, customers are few and far between, so the dealers are ready to lend to shakier and shakier customers. Especially with models that do not move out the door fast enough, leftovers or anything that is not a hot-seller. Face it, if your credit is bad you might have to settle for an unpopular model and pay a lot for it, but you can usually find someone to finance it for you.
Whatever you decide, good luck and take care of your credit!
Don’t be fooled! Get your credit report: