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| Credit Answers > Debt-Management-Articles-2009 > Credit and Car Buying |
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Since you are currently enrolled in a debt settlement program, buying a car may seem difficult. However, if your only means of transportation is unreliable
and creating costly repair bills, you may make the decision to purchase a different vehicle to save you time and money. Here are some tips that could help you purchase a reliable
car at an affordable price.
Make A List Of Expenses
Establishing a budget will help you determine how much of a car payment you can afford.
Know Your Credit Score
It is good to know exactly what your credit score is before you apply for a car loan. You have the right to receive a free copy of your credit report by visiting
www.annualcreditreport.com. For more information on how to purchase your credit score, visit
www.myfico.com. According to Jeff Ostroff, host of the informative web site,
www.carbuyingtips.com, "Lenders have greatly tightened requirements after the financial crisis to ensure a buyer's
ability to pay back the loan. It's more important than ever to make sure your credit report is as clean as it can be."
Choose A Vehicle
Before you apply for a loan, have some idea of the type of car that you would like to purchase. Visit sites such as www.Autoweb.com,
www.Cars.com, and www.CarsDirect.com to search for vehicles in your area and
to research makes and models. You may consider obtaining a vehicle history report at www.carfax.com for any car in which you
express an interest. Unlimited reports for 30 days cost $39.99.
Since you are enrolled in a debt settlement program, select a reasonable-priced, modest vehicle. Remember, you are buying a car for reliable transportation and not as a status
symbol. In most cases, you want to select a late-model used car as opposed to a new car. You can find many quality pre-owned vehicles for less money. In addition, you avoid the
hit on the first year depreciated value of the new car.
Choose A Financing Option
There may be lenders who will extend credit to you despite your financial trouble. With the rise of the internet, you no longer have to rely solely on the dealer for financing.
www.CarBuyingTips.com strongly recommends the use of online lending services such as
www.autocreditfinders.com. This site will put you in contact with lenders who specialize in high risk loans. You may
also try applying for a car loan through your credit union.
Be aware of dealer scams. Salesmen realize that individuals with flawed credit reports and tight budgets focus heavily on the amount of the monthly payment. Therefore, they may
offer you a car loan in which payments extend for 72 months. Although the payment amount may fit your budget, you will most likely be paying too much for the vehicle. If you
decide to sell or trade in the car before you have made all of the payments, you will be "upside down in the car," a phrase used by dealers to mean that you owe more than the
car is worth.
Try to obtain a car loan for no longer than 48 months. If the figures are not workable with the car that you choose, select a less expensive vehicle. Oftentimes, some dealers
prey on your emotions and make you feel as though you should be grateful that they approved you for any car. They might also tell you that you could not get financed through
any other dealer or lending institution. If the dealership will not budge on the payment or loan terms, consider taking your business elsewhere.
Read All Paperwork
Before signing any paperwork, read everything carefully. Oftentimes, dealers add a variety of miscellaneous charges such as VIN# window etching, dealer prep, and a warranty that
you never requested. In most cases, these services are not necessary and can be done cheaper on your own.
"The buyers need to be reminded that they are in dire straits, they can barely afford the car, so they should be going there to buy a car only, nothing else," said Ostroff.
Visit Ostroff's site at www.carbuyingtips.com to read in detail about the top ten car dealer scams. Arming yourself with
knowledge will help prevent you from falling victim to car salesman trickery.
Helpful Car Buying Web Sites
Kelley Blue Book: This site provides car buyers and sellers with new and used vehicle information. Visit this site to see
how much your car is worth if you are selling, buying, or trading.
Consumer Reports: The auto section of this site gives details and unbiased reviews of new and
used vehicles in categories such as safety and value.
Bankrate.com: Bankrate offers a long list of helpful online calculators that may assist you with car buying. There are
calculators such as the "Car Early Pay Off Calculator" and "Negative Equity Auto Loan Calculator".
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