As we reflect upon the blessings we have this time of year, I want to say thank you to the men and women who selflessly serve their communities. The dealer’s relationships with a variety of banks and finance companies may mean it can offer you a range of financing choices. Saving for a down payment or trading in a vehicle can reduce the amount you need to finance and reduce your financing costs. Consider all the costs involved, not just the monthly payment, for financing or leasing a vehicle. Make sure you ask your dealer if the model you are interested in has any special financing offers. Consider the total costs of financing the vehicle, not just the monthly payment.
When no special financing offers are available, you usually can negotiate the APR and the terms for payment with the dealership, just as you would negotiate the price of the vehicle. The APR that you negotiate with the dealer usually is higher than the wholesale rate, because it includes an amount that compensates the dealer for handling the financing. Consider waiting to sign the contract and keeping your current vehicle until the financing has been fully approved.
Or check other financing sources before you sign and before you leave your car at the dealership. Usually, you will get your credit score as part of a credit score disclosure notice after you apply for financing. Before signing any documents, whether at a dealership, bank, finance company or credit union, understand the following terms because financing has a language of its own. Equity financing is normally negotiable and may or may not include a buyout option.
Fixed Rate Financing — Financing where the finance rate stays the same over the life of the contract. Variable Rate Financing — Financing where the finance rate varies and the amount you must pay changes over the life of the contract. You have a right to dispute inaccurate information in the report, and you should do that before you apply for vehicle financing or a lease. Compare APRs and financing terms from several sources, such as banks, credit unions, finance companies, and dealerships.
It requires certain creditors to provide consumers with information if the creditor denies them financing or takes other adverse action. Risk-Based Pricing Rule — gives most consumers information about their credit scores when they apply for financing. Most creditors comply with the rule by providing consumers who apply for vehicle financing with a Credit Score Disclosure Notice. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments and methodologies, with consideration to their institutional setting.