ALT-1 How your Credit Score can Affect Car Sale Negotiations
A consumers credit score can come up at any time during the negotiations for a car and effect everything from the price to the type of car being purchased. For example if a person stands up and says they have really bad credit the sales person might redirect the customer to a specialist for people with bad credit. Sadly some people think they have "bad" credit and don't know what that really is and it can cost them a lot of money.
A good example is "Mary." Mary has always paid her credit card bills and student loan but knows her credit score is under 700 because she has never bought a home or had a car loan. In fact her score is 675 and a sales person told her the "special" financing incentives are only for people who have previous car loans and scores over 680. That is not always true. Mary should secure a private loan for a car at her bank and know what she can get, and then tell the dealership she'll buy their shinny new car if they give her the special advertised rate. Dealers can often make calls for exceptions to these rules and get such deals done.
Sadly some people think they have good credit because the banks and finance companies give them lots of money. When the car dealership runs their credit report they can see they are over extended and a credit risk. They can't get special rates or good rates purchased by their lender network. In stead of taking on a really bad rate from the dealer this person should negotiate a loan with one of his existing creditors that has already given them money.
Be very careful when a finance expert or sales person tells you that your credit score means a higher interest rate. In some states it is legal for the dealer to make arbitrage on your car loan. This means they can sell you a car loan at 8% while it only costs them 6% to buy. This is why you should always check with your personal bank first to find out what rate they will give you. Remember a personal bank sells loans not cars.
