Buyer Beware: Dealer Financed Auto Loans Can Be Costly How You Can Improve Your Credit Score Here ph
Consumer Reports just posted an article written by Anthony Giorgianni on how to avoid making costly errors when purchasing a car using dealer financing.
Before going to a car dealership, it pays to shop around at banks, credit unions and online sources such as Bankrate.com and E-Loan and get pre-approved for a car loan at the lowest interest rate (Going to multiple lending sources will only count as one hard inquiry on your credit report if it involves a major purchase and is done within a 30 day period). Having the pre-approval before you walk into the dealership will put you in a position of strength when negotiating a deal. If you do find that the dealership rate is the most favorable, Giorgianni’s article emphasizes the need to be aware of some not-so-favorable practices that can occur with dealer financing: 1. Scam: The dealership quotes an interest rate for the loan, you agree and complete the paperwork. Several days later the dealer calls to say that you didn’t qualify for the lower interest rate. You are then faced with three choices: accept a higher rate, make a larger down payment or return the car. Solution: Don’t take immediate delivery of the car and read all of the fine print in the loan agreement. Make sure the agreement states the approved loan amount and interest rate before you sign it. 2. Scam: The dealer fiddles with your credit application, maybe increases your income without your knowledge to enable you to qualify for a larger loan. Solution: Review the credit application before signing it and get a copy of the completed
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application. Check the loan amount and monthly payment to make sure it’s what you anticipated and can afford. 3. Scam: The dealer offers “gap” insurance in case of damage, accident, theft of the car and your loan balance is more than the car is worth, and to cover loan payments in case you lose your job or become disabled. Solution: Check with outside insurance providers to understand the coverage you need and compare policy costs to better evaluate the dealer’s insurance once your loan has been approved. 4. Scam: You want to do a trade-in when purchasing a new car but the old car value is less than the value of the outstanding loan. The dealer offers to pay off the old loan as part of the deal. In effect the dealer may be adding the old loan balance to the new loan without you realizing it.
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Do's and Dont's of the Credit Card Game Here pf Futhermore: Buyer Beware: Dealer Financed Auto Loans Can Be Costly
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