Six Tips To Prepare You and Your Credit For a Car Purchase

These days, buying a car is a big deal, especially if you’re buying a new car, since prices for new American cars average $33,560. In addition to the price tag, many people are stressed because their credit may not be up to snuff enough to gain financing. Adding to the stress of making a major purchase is the prospect of dealing with car salesmen, a profession that does not enjoy a good public reputation because of a few bad actor’s high-pressure tactics, hidden fees, and famed efforts to squeeze as much profit out of the transaction as possible.

That said, more than seventeen and half-million people bit the bullet and bought cars in 2015. That comes out to a staggering 2,000 cars per hour, every hour of the day, to say nothing of the people who just looked at cars and didn’t purchase one for whatever reason. So, is it any wonder that customers sometimes have to wait for hours to talk to a car salesman? However, buying a car doesn’t have to be a long, boring hassle. It also doesn’t have to be a bit hit on your credit rating – in fact, getting a car loan can actually help your FICO credit score. Here are some tips to make car buying less unpleasant.

Step 1: Plan Your Shopping Trip Carefully

Every time you go into a car dealership, your credit will be pulled and a notation will be placed on your credit report in the form of an inquiry. Inquiries can hurt your credit score, at least temporarily. To minimize the number of inquiries on your credit report and to cut down on the time you have to wait at the dealership to see a salesperson, do a little planning first. Go online and check out the car dealers in your area and then scope out their inventories. When you find something you’re interested in, contact the dealer, either by phone or via e-mail and set up an appointment. Doing this one simple step will ensure that your car buying experience gets off to a good start. Remember, if you simply show up at the closest car dealership, there’s a good chance that you’ll spend a long time cooling your heels, waiting to be seen, and you may get unneeded inquiries on your credit report going into a dealership that doesn’t have a car you want.

Step 2: Try To Find The Car You Want On The Dealer’s Website Before You Arrive

Before going, make a list of the size, color, and features you are looking for. Having a clear idea of what you want will make your car search easier. Then, once you know what you want, start checking the dealers’ inventories. Once you find a suitable vehicle, get in touch with the car dealer and ask to see that car. Sometimes cars that have been sold are still up on the website, but once you contact the dealer with your desired make, model, and features, they can probably find something similar and have it waiting for you when you arrive at the dealership.

Step 3: Do Your Research So You Know The State Of The Market

An informed consumer is the one who will get the best deal on a new or used car. It helps to know which makes and models are the most desirable on the current market. If there’s high demand for certain cars, then you as the buyer, will have far less leverage then if you’re going for a car that has been in a dealer’s inventory for a long time. How can you tell which cars are most desirable? Well, a good start would be consulting a website like Edmunds.com and using its TVM (True Market Value) tool to ascertain which cars are currently experiencing the highest demand.  The price you pay for car will directly factor into whether or not you qualify for a loan to buy it, as too high a payment can disqualify you for the loan. Conversely, if you qualify for a loan for which you will have a tough time making the payments, you could find yourself with an auto repossession, which will definitely hurt your credit rating.

Step 4: Be Aware Of Your Credit Score And The Interest Rates You’re Eligible For

It may seem like an obvious step, but you’d be surprised how many people go car shopping without knowing their credit score or even their credit score range. Your credit score will have direct effect on what kind of interest rates you can get when it comes time to finance your vehicle. Before you apply for financing, you would do well to get your 3 bureaus credit report, to check for any errors that could lower your score. Check with your financial institution and find out what kind of interest it would charge for a car loan. You should also check with the dealership selling the car to see if it can beat the rate you’re being offered by your bank or credit union. If you can get a better interest rate from your dealer—great! It will greatly simplify your car purchase, and save you some money to boot.

Step 5: Understand What Incentives May Be Offered

If you’re buying a new car, then you absolutely must go online and learn about the incentives being offered for the particular car you’re interested in. Incentives are not the same as discounts; so don’t be misled by car dealers who try to combine the two to present the lowest MSRP for the car you’re looking at. You may have to choose between a cash rebate or a low interest rate. To know what incentives the various car manufacturers, are currently offering, check out the Car Pro Newsletter, which breaks down the incentives being offered by all different car brands. You’ll have to register for the website, but it’s free, and worth the effort in order to get the very best deal possible.

Step 6: Visit The Dealership During The Middle Of The Week

This may seem like an obvious suggestion, but it never occurs to many people because of their work schedules. However, you should absolutely go car shopping in the middle of the week. Car dealers do most of their business on weekends, so if you go in the middle of the week, you’ll have a much easier time getting in to see a salesman, and you won’t have the time pressure that you might experience if you visit the dealership on a weekend, when they will be far more crowded.

The Bottom Line: Get The Best Deal You Can Without Having Your Time or Credit Wasted

In the end, we all want to get a good deal on our next car purchase. No one wants to have their time wasted either, or be annoyed by a car salesman’s high-pressure tactics. The good news about all those inquiries you may be getting on your credit report? Most credit scoring systems treat all inquiries made by people applying for auto loans within a 14-day period as one inquiry. If you do your research and plan ahead, you can greatly streamline the process of buying a new or used vehicle. Buying a new car does not have to be a stressful, unhappy experience, and you don’t have to go through it at the mercy of the dealership or worrying about your credit rating. If your credit is not good enough to get the best deal on your financing, maybe it’s time to sign up for professional credit repair to improve your credit score.

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