The Dreaded Finance Department at a Car Dealership.
The Finance department does not have to be a bad experience, if you do some homework before you start the shopping experience you will be in great shape and the finance department won’t feel so bad.
Many customers who go into the finance process, have just completed a very exciting step, saying yes to the vehicle. Buying a New or Used vehicle is such a wonderful experience to many people they look forward to it, this is why most customers start looking for a new vehicle within 27 months into their loan.
Growing up I bought 7 vehicles before the age of 21, I was a car nut! I loved going to dealerships looking at the new vehicles that just hit the lot, whether being new or used. I knew the inventory of most of the dealerships around me, better than the managers, and that was before the internet!
The average person spends close to 14 hours online researching the vehicle that they intend to buy, but they spend no time, trying to figure out what they can afford or even what they credit profile is.
So here is my recommendation:
- Go to www.annualcreditreport.com and get your free credit report and score from all 3 credit agencies.
- Go through each credit report line by line and see if there are any errors in your credit profile – you would be surprised how many issues are in a credit report and it is very easy to fix. (we will cover that in another blog)
- Lenders will make a credit decision, not on credit score alone, but the quality of the credit profile. I’ve seen low scores like 550 or even lower get approved for a loan or a lease
- So, if you’ve had credit issues in the past and now you are in the process of repairing your credit (Paying creditors on time, and or paying off debt) that is weighed higher than just a low credit score.
- A credit score can be intimidating to understand, so let me explain it with letter grades. If I were to put a letter grade next to each credit score everyone can relate to it
|Credit Score||Letter Grade|
|0||insufficient credit profile to generate a score|
|651-700||C+ to a B-|
|741 – 800||A_|
- Typically score of D- to C will pay a higher than normal APR and the C+ to B+ can get good rates and the A to A+ will typically get very low rates like 0%(for New Vehicle)
Now, you are well armed to go through the finance process at your local dealership. As you go through the credit process, you can say something like “I’ve done research and I know my credit profile and my score and I should qualify for a very low APR!” If you did that you are you will be in a better position than 85% of most consumers.
So, do your homework on your credit profile so that you can get the car you want to the payment that will fit your needs.