So you’re ready tobuy a car but you, like many of us, worry that your credit isn’t good enough tofinance the vehicle you need or want.
Here at Krietz Auto,we understand your predicament and we take steps to make sure that even buyers withless than ideal credit ratings, still have the opportunity to walk away withthe automobile of their dreams.
Maybe you are bogged down by student loan debt that you’ve fallen behind on in the past, or you’vemissed some payments on your credit card. This activity can reflect poorly inyour credit report, but a lower credit score can also be caused by inaccuraciesin your credit history.
The firststep in financing a new vehicle is to get informed about your credit byrequesting a copy of your credit report from one of the big three reportingbureaus –Experian, TransUnion, and Equifax.
Accordingto the Federal Trade Commission ,you’re actually entitled to one free copy of your credit report every 12 months,so now is the time to take advantage.
The FTCsuggests you order your report online from annualcreditreport.com, the onlyauthorized website for free credit reports, or call 1-877-322-8228. You willneed to provide your name, address, social security number, and date of birthto verify your identity.
Before youcome in to shop, plan. Adjust your monthly budget to include the expensesequated with buying a car. This can include things like:
- Monthly Loan/Lease Payment
- Auto Insurance Premium
- Fuel Economy Estimates
- Fees for Vehicle Tags, Registration,Licensing, Emissions Testing, State Inspection, Documentation, etc.
- State and Local Taxes on YourVehicle
- Maintenance and Repair Costs
- Value Depreciation
Yourbudget should also include a complete inventory of your income and monthlyexpenses. From this you can gauge a comfortable price range for your vehiclepurchase. According to the advisors at Money Under 30, this is the rule of thumb to follow:
Meaning: “whenbuying a car, you should put down at least 20 percent. You should finance thecar for no more than 4 years, and you should keep your monthly car payment(including your principal, interest, insurance and other expenses) at or below 10 percent of your gross (i.e. pre-tax) monthly income.”
Accordingto them, your total cost for buying a vehicle can fall in the range of 10 to 50percent of your gross annual income.
Want to see what you’d probably end up paying for a $20,000car?
You can try our free payment calculator for a general estimateof your monthly vehicle payment.
FindA Good Loan Program
Thebiggest thing to keep in mind about trying to buy a vehicle when you have a lowercredit score is that the financing lender you choose may ask you to reach someadditional requirements before they offer you a loan.
Accordingto our COO Laura Bowen-Krietz, these requirements can include anything from proofof income, proof of residence or even personal references.
Sheexplained that Krietz works with lenders who are willing to make deals withclients who have challenged credit.
“If youhave any concerns about your ability to finance a vehicle, we suggest you fillout our credit application, so we can get the process started on an approvalfor you.”
She warnedthat the process to get approved takes time. So remember to be patient!
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