Cars and Credit Report
The Problem I was driving home from the store the other
night when I noticed a license plate that made me laugh to
myself and then I proceeded to feel sorry for the poor sap
driving. The plate read "0 DOWN". It was a white, shiny, new
Ford Explorer (probably an 06'). Here's what really got me about
the caption: Not only did this consumer purchase a brand new
vehicle with no money down, but he was proud of it. DUMB!
Commercial advertisements and society as a whole embeds the "Buy
Now, Pay Later" method into our heads and it works so well that
around 90% of all consumers who purchase new cars do not put $5
down on the vehicle before signing the papers. The sad fact is,
is that the average new automobile loses $3,000 as soon as it
leaves the lot. Technically, you have gone into debt for
something that loses value before you even use it. As if this
wasn't depressing enough, the less money you put down on a car
and the worse off your credit is, the more you pay for the car.
If this isn't one big sand trap I don't know what is!
The Role of Your Credit Report
Your online credit report is affected 2 ways when you buy a new
car with no money down. First let's look at the role it plays
after you decide you NEED that shiny new sports car. The mass
majority of consumers are thinking of one thing when they sit in
the 'sales chair' to go through the paperwork: driving the car
home (man this is bringing back some bad, bad memories). In
order to do this you will need to finance the vehicle which
requires pulling up your credit history and your credit report.
This can easily be done online right in the sales office while
you look around to make sure no one else tries to sneak off with
your new toy. The worse off your credit report is, the higher
interest rate you will pay. (This is fine though as long as you
can still afford to buy food every other week and pay a few
bills here and there.) The other role that your credit report
plays in this game is the after-effect. The average new car
buyer's car payment is 25-30% of their total income. This
creates a nice, big road block on your credit report in itself
for when you are ready to make another large purchase. Not to
mention when you fall behind on even one payment and your credit
file takes a hard blow. Try to keep these factors in mind next
time the kid in you tries to make a financial decision.
The Solution Well you're not going to like the best
solution but here it is anyway: PAY FOR THE CAR IN FULL! If you
saved the car payment every month in a good money market
account; not only would you save time and money, but when you
walked into the sales office with piles of hundred dollar bills
you would get quite a deal! Okay, so you're more likely to win
the super lotto than do that right? Well here are a few ideas.
As long as you practice a few you might get ahead of this nasty
game a little bit or at least protect your online credit report.
First, consider getting a 2 or 3 year old car. You can still get
a shiny one and the previous owner will have taken the major
depreciation of the vehicle passing the savings directly to you.
Second, if you can, try waiting and searching to find the best
deal possible. Trust me, there is more than 1 of those cars in
the market. Third, put something down. Anything! For starters
you could put down 10 to 15%. This will lower your monthly
payment, lower your interest rate and maybe even cut your payoff
time down. Lastly, get a bargain. Don't settle for the asking
price by any means. Be patient and keep control of your focus.
One definition of maturity is learning to delay pleasure.
To read more about how you can get your online credit report
free with no obligations, see what is on your file and find out
how to fix your credit report go to http://www.cleancreditonl
ine.com