Perhaps credit is an issue for you. We've all been down on our luck before but if you have been making efforts to build your credit score don't blow it now. Now that you have built up or reestablished enough credit to get a loan it's time to do some research and find out which lenders in your area who specialize in not so perfect credit. As Always. I will preach finding your own financing before you go to buy a car. If credit is an issue. Your options are going to be narrow.
What you are going to want to look for is a lender who specializes in secondary auto credit. Second chance auto credit is what it is referred to as well. Some stores will claim to specialize in second chance credit. While they may. They just simply have a finance Manager working for them with a long established relationship with the secondary lenders in the area. Unfortunately, a second chance credit finance manager can be one of the biggest slimeballs in the business you have ever met. They can be real good at putting you at their mercy real quick. Basically, hurt your feelings about your finances and make you feel damn lucky if you even get a car at all. I witnessed this time and time again and it made me sick. Watching a family who desperately needs a vehicle and has credit issues paying an absolute premium for what they drove out of the lot in. It was disgusting. Disgusting to know that the finance manager just got them approved through a lender they could have just gone to themselves and been approved. Approved for 1,2,3.......hell, who knows how many less interest points than the second chance credit jerk quoted at the dealer. A second chance finance guy usually has little problems in ripping someone's head off with a few extra interest points because he will establish himself as an authority in bad credit and present it as a "this is just the way it is" kind of thing. Profiting off of desperation to put it simply. Don't find yourself being so desperate to get a car that you ignore everything it takes to get there. Such as interest rates and price of the vehicle. My point is here. A second chance credit officer is no more or less of a middle man than any other finance manager. They themselves can't approve shit. They get on the phone with the banks and plead and beg for a low rate they can build some profit for themselves onto just like the others. You can cut this goof out of the deal just as well as a regular finance manager. Save yourself the trouble. You don't want to even meet a second chance finance manager at a dealer. There is a good chance he or she is living high off the hog and they are not your friend.
I will tell you what I would do though if I had credit issues and I required second chance financing. What you want to find out is who that second chance guy is dealing with. Since these loans are high risk for lenders they will bought through local lenders. I would do some searches for second chance credit in the area I lived and start there. I would make some phone calls and try to assess which ones sound promising and then visit the ones I choose. If you are able to get a pre-approval through any of them. You will then know what you can buy. Once pre-approval has been achieved that lender will give you the criteria your new/used vehicle must meet. Such as the year, miles, price, etc. The car you are buying is that lender's collateral so it is likely there will be some somewhat strict conditions you may have to meet in terms of the vehicle you choose. So let's say. At this point for example. I have been approved for a loan and I have to find a vehicle that is a 2007 or newer with less than 50k miles and I can buy for $15,000. Those are vague conditions but it will be something like that. Now I at least know what types of vehicles I can truly shop. What I wouldn't want to do though is reveal to any dealer that I require second chance financing. Even though I am already pre-approved at this point. Letting the dealer know I am going through second chance financing could potentially kill a lot of negotiating power and just the overall seriousness I am taken with. Once I found a vehicle that may work for me I would then let my salesman know I was ready to work up a deal on it. At this point a good salesman will begin to poke and prod at your finances if he hasn't already. I would kindly let him know I have already made arrangements and I am pre-approved. He may go on to say things like " with whom, may I ask?" or "maybe we should take a look at your credit, maybe we could do better." Replying with something like "no thank you, I am plenty confident in my sources" may get him or her to back off a bit. The reality is this is your business and you don't have to share it with anyone. Keep your finances to yourself. If he wants to make a sale he will play by your rules. You simply want to get a purchase order for the car you want to buy so you can take it back to your lender to see if it meets the conditions they have set for your auto loan. Hopefully, at this point all is well and your lender approves your purchase sending you back to get your car. Now once you go back to the store to go through the finance office the financial cat will be out of the bag and they will know who you are getting your loan through simply because the lienholder will have to be typed on your paperwork somewhere. At this point it's ok if they know this. We've already bypassed the problem areas for someone with bad credit at the dealer. Which are getting hooked in by the second chance finance manager and losing our negotiating power with a salesman.
Another great car buying tip I can give in terms of credit is DO NOT run around town to 20 different dealers and let them run inquiries on your credit (I don't want you to let a store run your credit period). This WILL drop you credit score. It makes you look like a trigger happy loose canon on paper and lenders don't want to see this. Not running more than a half a dozen inquiries within a month or so shouldn't hurt anything though. Remember that these dealers all get their loans through the same source and people all to often get the misconception that there is something "magical" one store can do for you that another cannot.
Having bad credit is bad enough. That last thing anyone needs when trying to build their FICO score back up is a car they paid too much for with an inflated interest rate keeping your monthly payment higher than it needs to be. Do some research on second chance credit in your area. Make an educated decision on which ones sound the strongest. Avoid as many multiple credit inquiries in a small time frame as possible. Keep your credit siuation to yourself though the negotiating process and you have done everything you can as a person with bad credit can do to still get a good deal on a car. The main objective here is not to put yourself at the dealer's mercy. Trust me. If they know credit is an issue. They will play off of it if they can.
Monday, September 19, 2011
Credit an Issue? Don't Do this then - Financial Car Buying Tip
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