Financing A Vehicle And Your
Credit:
Financing your car or truck is made to
seem very easy at the dealership and just a
minor step in the purchase process. Dealers work with a host of
financial institutions to finance your vehicle, everywhere from
the manufacturers own captive finance
division to a number of banks and credit unions. We at the
dealer have many opportunities to make a potenially HUGE profit
during the financing part of the process. (you'll
see)
Your credit history and score are the most important part
of financing your car. Your credit score will determine the
interest rate that you will be paying on your car and the
amount of your down payment.
Now, you have entered the Finance Office and you are
ready to sign your paperwork and take your car home. First
let's talk about the extended warranties I have to tell you about, they
are usually layed out in terms of monthly payments. (it is
easier to sell it when we show you how much it effects your
payment, rather than show you the lump sum price of the
warranty) You don't want the warranty? What if in year 4 of the
payments you have to spend $ 2500.00 to repair your vehicle and
it is out of warranty? What if, what if, what if.......you know
these new cars have computers and lots of electronics in them
and it is very expensive to repair. (We will cover more in
Warranty Section) Now I would
like to tell you about the tire
warranty, because you know tires are not covered under any
Manufacturers Warranties......what if some more...... Now I
would like to tell you about Gap
Insurance......what if.... Now I would like to tell you
about life insurance on your loan......what if...... Now that
we are all finished with the warranties, I am sure you will
want to protect your New Investment with Undercoating,
Rustproofing, Paint Protection and Fabric and Carpet
Protection. You want your vehicle to stay like New, don't
you?
Before you know it your payment went up $80.00 a month.
What, that is too much. How would it be if we could get your
payment down $55.00 and you could still be comfortable knowing
you have the protection you need? OK. (we just added 12 months
to your loan term cha-ching)
When you are signing you say I did not want to finance for 72
months. Well at 60 months your payment is $55.00 higher,
would'nt you rather pay this than that? OK (cha-ching)
What about my interest rate isn't that a little high?
Your credit score determines your rate. If your credit score
was a little bit higher we could give you this rate. But based
on your credit your rate will be.......OK. (cha-ching)
What if I drop the warranty to
get my payment a little lower? Well, I gave you the special
rate becuase you purchased the warranty. You see there is a
special rate discount when you purchase a warranty that last
the term of the loan. If you drop the warranty the rate will go
up a little and now your payment will be almost the same.
(cha-ching) I love this business.
Enough of that, let me give you some of the
U.S. Laws and Regulations on
financing and later I will give you the new run down After You
Are Prepared for
Financing. Step by
Step Financing.
Truth in Lending
Act – requires that, before you sign the
agreement, creditors give you written disclosure of
important terms of the credit agreement such as APR,
total finance charges, monthly payment amount,
payment due
dates, total amount being financed, length of the credit
agreement and any charges for late
payment.
Credit Practices
Rule – requires creditors
to provide a written notice to potential co-signers about
their liability if the other person fails to pay;
prohibits late charges in some situations; and prohibits
creditors from using
certain contract provisions that the government has found
to be unfair to consumers.
Equal Credit Opportunity
Act – prohibits
discrimination related to credit because of your gender,
race, color, marital status, religion, national origin or
age. It also prohibits discrimination related to credit
based on the fact
that you are receiving public assistance or that you have
exercised your rights under the federal
Consumer Credit Protection
Act.
Joe Slick
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