A free and clear trade may make up a portion of this, but cannot be overstated to cover the entire amount. BEWARE of dealers advertising a Push, Pull or Drag trade-in allowance of $4,000. (Remember that old saying, if it’s too good to be true, it probably isn’t true. Figuring out where the $4000 for a $10.00 car came from, should not be too hard to figure out when you see the selling price of the car. The banks know it too!)
The Score. The conversation will turn to “What is your Score?” This is the FICO or Auto Fico credit rating on you. Every person has a history recorded by the three credit reporting agencies: TRW, Equifax and TransUnion. Your payment history factors into a score which determines the amount of risk associated with giving you a loan. (Remember, having a house loan doesn’t necessarily make you an honor student. You can’t take off with a house, but you can steal a car. Auto recovery rates are considered in the risk equation.) Pick one dealership location and allow them to run a credit inquiry. Ask to see all the reports and note the AUTO score of each one. Dealerships are NOT allowed to give you a copy of the credit report, but you should ask for a copy of the application. The dealership is required to give you a copy of the SIGNED application. Upon receipt, note the dealership name on the paper, and stow it away for safe keeping. Have your credit application run only once. When speaking to different dealership personnel, tell them what your score is on each bureau. Repeated credit inquiries will reduce your score and buying power, considerably. When the final deal is made, the dealership will make a credit inquiry for their use in getting the loan approved.
Visiting the dealership. The criteria for selecting a dealership should be:
- Reputation and Consumer complaints.
- Quality and quantity of late model pre-owned vehicles.
- Largest rebates on new models.
Go to the dealership website and complete an online finance application, keeping a copy for yourself. When the Internet or Second chance finance manager calls, discuss your situation openly. The majority of dealership personnel in this position knows what you are dealing with, and want to make the process easy. Dealing with you professionally, there is no place for an attitude on either side of the desk. This process should be completed without feelings of duress, embarrassment or humiliation.
The cost of bad credit. Regardless of the reasons for why you have a credit problem, the banks only do business where they can be assured they will be able to collect the full debt.
