| My credit record shows some late payments from my previous car loan and my score is 620, how many points over the current APR should I accept? |
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It's important to remember that the dealership's Business Manager (the person who handles the dealership's financing) works on commission. And it's important to remember that he is trying to sell you the highest possible interest rate. The higher the interest rate, the more commission he earns -- and the more you end up paying in interest charges. What they don't want you to know is that the interest rate he offers you is negotiable. He will point out to you that you'll have to pay a high interest rate because you are a credit risk. And he is right; you are. But that doesn't mean they can make a killing off of you. If you feel that the interest rate they are offering you is too high, then threaten to walk out. At that point, he may lower the rate. What dealers usually do, they give a so cold "leg" to the payment. For example, if actual payment is $410 a month, Sales Manager will tell you that your payment is $460. When you go to Finance Office Business Manager will introduce you to 5-6 available products for your car (extended warranty, alarm, lojack, paint protection...) and then will tell you that will all of these products your payment will be only $470 a month. What is $10 a month more for all of it, you will think. Actually it is $60 a month more. maybe even more if you agreed for 9% interest rate but they can get you 8% from the bank. Always ask to see computer screen when in Finance Office. Depending on the bank, If your credit score is 710 and up you should get the best possible interest rate, no mater how many late payments you had. If your credit score is 660 to 709 add 0.5 to 1 point on the best interest rate. That's true only 0.5 to 1 point! Do not trust dealer if he tells you you have bad credit and your score is 660. If your credit score is 610 to 659 add 1 to 2 points on the best interest rate. If your credit score is lower that 610 but you have paid of car, was never late on it you still can get only 3 to 4 points on the top of the best possible rate. Check Your Credit Section if you want to find out more about the credit. |
