Even though most people might dread the car buying process, it’s even worse if your credit isn’t in good condition. Your credit has a huge impact on your ability to buy a car and the ease of the process of buying a car. Think of each of these ways your credit affects the car buying process before you start your new car search.
You Can Get a Better Rate
The higher your credit score, the lower your interest rate. While zero-percent interest are generally not available for used cars often new car manufacturers offer them as an incentive to purchase their brand. Improve your credit score to get the best rate possible. When you visit a car dealership, you will get a price based on your credit and ability to pay back the loan you use to purchase the car. If you have better credit, you’ll be able to afford a more expensive car than if you had bad credit. Keep in mind all the limitations you have with your income, though. Don’t buy something you know you can’t afford.
Divide and Conquer
Remember that there are several distinct processes involved in buying a car. The first phase is the selecting the car itself. This should involve research on which vehicle best meets your needs, has a good reliability rating, and is a good value for the money. The first step should be done at home in front of your computer, so there is no pressure and you can think clearly and take your time.
The next step is to find the vehicle you are looking for and negotiate the best deal possible. This step can also be done from your computer but beware of a new scam where dealers offer ultra-low prices on their website and will even tell you that it is in stock if you call, but when you arrive they tell you it’s just been sold and then try to sell you something more expensive. If you are faced with this scam you have two choices:
- Walk out and refuse to do business with dishonest dealers.
- Step outside, call the dealer about the car and ask if it is in stock. If they say yes walk back inside and confront them with their lie and force them to honor the advertised price.
The third step is to finance and purchase the vehicle. There is no law that says you have to finance through the dealer. You can arrange financing through your local bank, credit union or rich uncle. But often if your credit is bad the only one offering you credit will be certain car dealers. Unfortunately, they will also offer the highest interest rates. But by separating the buying process from the financing process you can be sure that you are getting a good price on a vehicle and also getting a good deal on the financing. When you do both through the dealer the terms get muddled together and it is more difficult to get a good deal on both. But be sure to not tell the dealer you aren’t financing through them until after the price of the vehicle has been negotiated or they will try to make up the lost profit on the loan by jacking up the price of the car.
The Car Might Not Be the Best
If your credit is bad, you may not be able to get a new car. In fact, you’ll probably have to settle for an older model. But this isn’t always a bad thing. Remember that just by driving a new car off the lot it can lose a significant portion of it’s value.
You Could Be Unable to Buy One
Some people who have really poor credit scores may not be able to buy a car. There are things you’ll need to consider. If you have bad credit, you can still buy a car, but you won’t be able to finance it. Some people also resort to using dealerships that handle people with poor credit, but you can pay as much as twice what the car is worth if you choose a dealership like that. You can save up money and pay cash for the car, which is what you should be doing anyway, since most people spend a significant portion of their car money on interest.
Your credit’s impact on the car buying process can make or break your ability to buy. Consider improving your credit before you have a chance to buy a car so you can save more money and get something a little better.
You might also like:
