How Fixing Your Credit Score Can Save You $8,500
Did you know that your credit score can be the most expensive cost factor when buying a car?
The difference in cost between an excellent credit score and a poor credit score on a 60-month car loan is nearly $8,500!
Most car shoppers spend the majority of their time trying to negotiate the price of the car and spend hardly any time trying to improve their credit score.
This is fine if you have an excellent credit score, but if you have bad credit, you should focus nearly all of your time on fixing your credit score.
Let's take a look at the interest rates you can qualify for with different credit scores.
The following is for a $20,000 car loan with a 60-month term:
|Credit Score||Interest Rate||Monthly Payment||Total Interest Cost|
As you can see, someone with a credit score ranging from 720 to 850 can expect to pay only $2,520 in interest over the life of the loan.
Someone with a credit score below 589 can expect to pay 4 times more: $10,984!
These are seriously large differences in cost and hopefully you now realize how important your credit score is when getting auto financing.
Your first step is knowing what your own credit score is. You can check it at FreeCreditScore.com
3 Steps Every Car Buyer Needs to Take to Save Maximum MoneyThe key to getting the best deal is to gather price or lease bids from as many local dealers as possible. Then shop that best price around until no one can beat it. Here are the steps:
Step 1 Get Prices From My Trusted NetworkSelect the vehicle you're interested in to see if there are local dealers in my network who will provide you with their best upfront price. You will get direct access to an internet sales manager who you can further negotiate with online (no need to visit dealership).
Step 2 Get Prices From TrueCar / CarsDirectTrueCar, and CarsDirect are my top 2 online price quote recommendations. These services show you pre-negotiated prices from dealers closest to you - and the deals are usually pretty decent. But remember, you can still negotiate further.
Step 3 Complete my ChecklistFollow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan
Each week, I'll keep you up-to-date on the latest car deals and news that might affect your purchase. This includes...
- Best Rebates, Incentives, and Lease Deals
- Latest Car Buying Scams and Tricks
- The Best & Worst Time to Buy a Car
- Which Cars You Should Avoid