To jump start auto sales and boost a
slouching economy, many manufacturers have introduced
unprecedented financing rates, or interest-free financing, on
new vehicles. Prospective buyers need to be aware of all the
requirements and hidden obstacles.
As a result of our research, we have come up with a few
questions you should answer for yourself to better prepare you
for your visit to a dealership.
Do I qualify for the special
financing?
Simply put, qualifying for special
financing depends on three things: your credit score and your
disposable income.
Credit Score Dealerships usually use a
FICO credit scoring system, developed by Fair, Isaac, and
Company. A FICO credit score is an attempt to distill an
individual's behavioral patterns into an indexed number
designed to predict how likely that person is to repay a loan,
or make credit payments on time. The score, which is generated
by a computer model, is based on how well you've handled
credit in the past. Your FICO credit score is a magical
3-digit number that describes your credit worthiness. The
average FICO score in the U.S. is 725, but most dealerships
require a score of 750 or higher to qualify for these
financing specials.
Did you know that up until the past six
months, you weren't able to find out what your score was? With
the power of the Internet, consumer advocates created
awareness and public pressure on the credit agencies to
disclose credit scores! (Do you want to know your credit
score? You can find out real-time at Equifax for $12.95!)
Disposable Income Receiving special 0.0%
financing depends not only on your FICO score, but your
available disposable income, too. The dealer will probably
limit your total monthly payments, including the new loan, to
40% of your gross monthly income.
How can I shop for competitive loan rates
before I enter the showroom?
Shop you local credit union - They are
much easier to join than in the past.However, we still had to
go into our credit union to actually join and apply for the
loan.
Research online!
The best online auto loan shopping service
research numerous accredited banks for the most aggressive
interest rates. Being prepared is as good as cash in hand.
