As a 14 year veteran of the car business, I feel I have a decent knowledge base to offer consumers tips and advice on many aspects of the new or used car buying process.? I realize, that I do not?know everything.? In fact, I believe it was Socrates who said something to the extent of Wisdom is having the knowledge that you do not know everything.? And with that, I realize I still learn or experience something new just about everyday.
?However, what truly still amazes me is all the bad advice that still haunts every Google or Yahoo search result page when one types in keywords like; ?Car Buying Tips?, ?How To Get a Good Deal on a Car?, ?How to Deal With Salespeople? ?How to not get Screwed by Car Dealers? etc, etc, etc.? Some of the articles dealing with these topics anger me and some of the articles just down right make me laugh because they are so absurd.? With that being said, I wanted to offer my thoughts and opinions on a variety of these subjects; the first one being about ?Tips and Advice for Auto Loans?.
First things first, when trying to find financing on any product ? know and understand your credit score and history.? Remember, there are three different credit bureaus out there (Equifax, Transunion and Experian) and all three can and do have different scores.? Therefore, you need to know all three reports and also know which report is more widely used in your geographic region.? Additionally, I mentioned know your credit?history.? Just because your credit score is 719 due to one small credit card and a deferred student loan, that doesn?t mean you qualify for tier 1 (aka A+) rates and terms.? In fact, you may not qualify at all for a loan in that scenario.
Secondly, do your due diligence.? If you are planning on purchasing a new or used vehicle, check with your local bank or credit union to see what rates they are offering for the terms that make financial sense for?you.? Do not just assume that their advertised rate of 1.25% is available to you for any term or condition.? Remember, banks??sell? things too, and interest rates are one of them.? That 1.25% might be only available for a 24 month term when financing a new car where the loan doesn?t exceed 50% of the car?s value and you sign up for auto deduct from your checking account and so on and so on and so on.??If you plan on financing a car for 4 or 5 years and you?know you?re putting little to no money down, ask your financial?person at?your bank a realistic interest rate you can?expect.
Now, knowing a realistic rate from your bank, check into what the dealer?where you plan on purchasing your next vehicle from is offering.?Whoa, wait, did I say ?Check with your dealer??? After all, doesn?t a dealer ?rape? (that term makes me laugh every time I hear it)?customers on the interest rate?? Sure, maybe 20 years ago when there were few laws governing what dealers could and couldn?t do and before the age of the internet before buyers could check 20 million different places with just the click of a button.
What most buyers do not know is that state law governs the amount a dealer can mark up an interest rate.? Usually, that cap nowadays is somewhere around 2 points (give/take slightly).? Also, what buyers do not realize is that dealers ?buy? their money cheaper?from banks than?what the consumer can?on average.? And, guess what folks ? your bank does the same exact thing.? They buy money at let?s?say 1.5% and charge you 3.5%; your bank just made a profit on you.? You?re happy because 3.5% seems like a great rate and that seems to be what everyone else is offering.
The same holds true for dealers.? The dealer?s??buy rate? might be only 2% (the bank bought that money for 1.5% ? therefore made a half point of profit on the dealer, but since the dealer sends them millions of dollars in business each month, that .5% is very profitable for the bank).? The dealer then charges the customer 3%.? Wow, look at that, the customer gets a better rate than the 3.5% they would have received from their own bank.?Everybody wins.?
Obviously, dealers want you to finance with them.? Most dealers these days are pretty straight forward and additionally, as I stated before, the law governs the amount a dealer can mark up interest rates.? The days of dealer?s marking up rates 6 or 7 or 8 points are loooonnnnnngggg gone.? But, as always, it?s a good idea to know what a competitive rate for your credit score is, just so if you do run into that ?Bad Apple? dealer out there, you will be aware of it.
Finally, keep in mind, there are a variety of other factors that determine interest rate, term and even getting a loan approval.??I will delve further into these areas in subsequent blogs, but here are just a few other factors beside credit score and history that can and do affect auto loans.
*Loan to Value ? how much are you looking to borrow vs. what the car is worth.
*Age of the car (older the car, higher the rate)
*Mileage on the car (high miles can mean a higher rate)
*The overall loan term ? (the longer the term, the higher the rate)
*Your debt to income ratio (high debt to income can lead to higher rates and/or loan declines
*Multiple auto loan accounts
*Your employment history (banks look for stability)
At Gartner Hyundai, a premier Chicago Hyundai Dealer, located in Aurora/Naperville, IL, we try to offer all of our customers with informative information so each customer can make an educated decision.? We realize auto loans can be confusing and scary at times for some customers.? Gartner Hyundai?s primary goal is to find car deals and car loans that fit within a customer?s budget and also that the customer fully understands every aspect of the deal and loan itself.
Gartner Hyundai?s experienced finance team is here and happy to assist you no matter what your credit situation is like.? From perfect credit to not so perfect credit, our team will work to find you the best auto loan at the best rate for your situation.?
?by: Jennifer Paine ? Gartner Hyundai Saab
Source: http://www.ilovegartnerhyundai.com/blog/car-loan-tips-and-advice/
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