I'm paying cash, why does the dealer want me to fill out a credit application?

Dealers tell people it is required by the Patriot Act to monitor cash. I have not verified it, who knows, maybe they will pressure you to use them for new car finance. There is a lot of cashiers check fraud; you can see why they want check you out. Some buyers tell me they convinced the dealer to relent.

Know Your New Car Pricing Before You Go Car Shopping!

Visit online car buying sites and research car pricing. Read reviews in Chapter 2 of car pricing sites like Cars.com, InvoiceDealers, CarsDirect, Autoweb, Autos.com, Yahoo!Autos, Edmunds.com, and Car.com who get you competitive price quotes, car pricing, dealer cost and rebates.

Best New Car Loan, Used Car Loan Sites Where to check online car loan rates

5.99% Capital One Auto Finance can give you lower APR with hassle-free auto financing, approval in minutes. Bring your auto loan check to the dealer. Online Auto loan rates lower than most banks and car dealers I used them for my Lexus purchase, smoothest car financing ever Check today's online auto loan rates Online car loan application 15 min. response during business day No application fees, no early payoff penalties, no shell games Click here to calculate your vehicle loan payment For used cars they have person-to-person used car loans. Lower your current car payments with Auto Refinancing Loans. Car Lease Buyout Loans and Motorcycle Loans too Capital One Auto Finance will go as low as a 540 Credit Score

E-Loan's Apply Today, Drive Off Today can give you approval in 30 minutes. Online car loan rates usually well below car dealer rates. New car financing at its finest. Low APR, No app fees New Car Loans, Used Car Loans. Refinance your car loan E-LOAN can drop your car loan APR. Click Here To Check Today's Online car loan Rates. Refinance Calculator: Check car loan rates and payments E-LOAN will go a low as a 600 Credit Score How It Works: 1)Apply Online. Immediate approval and car loan documents Online. Print your online E-Fund Agreement and instructions for you and the dealer. 2) At your dealer, fill in the E-Fund Agreement, read and sign it, and you're done. The dealer and E-LOAN will handle the rest. Easy auto financing.

How to get bad credit car loans

If your Credit Score is < 600 don't submit loan applications that get rejected, dropping your credit score even further. Apply to AutoCreditFinders, they find "bad credit car loans" for you. They get you new car financing from high risk lenders, with decent online car loan rates, even with a bankruptcy. If your score is > 550, no bad credit for 6 months, AutoCreditFinders Bad Credit car loans can help you establish credit with lower online car loan rates than dealers. If you had bad credit in the past, but now you make more money, you'll find you are cash rich, and credit poor. Then a bad credit car loan might be your only hope.

Warning about car dealer low APR new car financing, few people qualify

Estimates show that as few as 7% of you will qualify for those low APR new car car loan rates we see advertised by car manufacturers. Some low APR car loans require a credit score over 700 to get that rate, and most require 36 months to pay off the loan. Many of you cannot pay off the car loan in 36 months, so you may be forced to pass on the deal.

"Subject To Financing": why the dealer called you 2 weeks later to re-sign your car loan

New car financing at the dealer can be a headache. The "Subject to Financing" clause appears on paperwork of all new car loans. It means the deal is not done, yet you think you are signing a contract. Then 2 weeks later the car dealer calls saying "your new car loan fell through." They knew what you qualified for when you bought the car, a common car loan scam, usually pulled on people with bad credit. You should not buy a new car first then worry about new car financing. When you buy a house, you MUST have approval first, so have your car loan in order before car shopping. Use online car loan sites such as Capital One Auto Finance and E-LOAN. The lower online car loan rates avoid these scams. Sometimes dealers call and say they found you a lower APR. Oh, Really? Have them fax you over all the new figures and APR in writing, and make sure they did not increase the number of months. Otherwise do not re-sign any contracts. We are big proponents of online new car loans. Don't get stuck with bad credit car loan if it's not necessary. This would have been avoided if you used online auto financing.

Financing used car loans, person to person

If you're buying a used car, how do you finance a used car loan? Capital One Auto Finance has person-to-person used car loans. Use these used car loans to pay your seller. They work smooth too, like butter! I helped my friend Jerry by a used Lexus from a private seller. You apply, they FedEx the used car loan check to you, then give it to the seller, who cashes the check. Done deal.

Car loan payment calculators

We have a car loan payment calculator for you in our Free Excel Spreadsheet Download Area. That car payment calculator is easy to use, with 4 loan scenarios on one 8x10 printout, allowing you to make quick decisions about your car loan. You can also find car loan payment calculators online at E-LOAN and Capital One Auto Finance. If you have a PocketPC type PDA, download our Car Loan Payment Calculator for Pocket Excel. Use our spreadsheets to compare online car loan rates to the car dealer car loan rates. Many people have told me they used our spreadsheets on their laptop or PDA to catch the car dealer cheating on the car payments. New car financing just got easier for you.

Keep your debt to income ratio and credit balances low
It's crucial before you attempt new car financing, to get your credit balances below 50% of your credit limit or they lower your credit score. You pay on time but can still have a low credit score if balances are too high, you applied for credit recently, or have too many open accounts. This surprises many people applying for car loans who get rejected. Get your debt to income ratio below 30%, otherwise banks stick you into bad credit car loan.

Auto Leasing Financing

If leasing, try Lease Wizard's Live Lender Quote (L.L.Q.) giving you 6 new car finance quotes from lenders in your area. Use it to bargain with your dealer on a lease.

New "bad credit" car financing credit score scam

This happens often with new car financing. One buyer told me his score was 780 from 3 credit bureaus. He applied for auto financing at the dealer. Four sales guys came out of the finance office with a bogus "credit score" of 580 circled in red. They lied that with his bad credit they could get him financed at 10.9%, not at the special 2.7% car loan interest rate. It's New car finance trickery. He pulled out his own credit report showing Equifax at 780, why is theirs is 580? Three salespeople scattered, the last guy lied that credit agencies show better credit scores to consumers than to lenders. The buyer left, buying his Chrysler elsewhere at 2.7% APR. For people with bad credit, this scam works perfectly, suckering you into a bad credit car loan.

Warning about Low APR car loans (0%, 1.9%, etc.)
Usually low APR rates like 0% or 1.9% are offered to few people with perfect credit, on new car loans typically 12 to 36 months. According to J.D. Power, only 7% of new car sales in 2003 took advantage of these low teaser rates, down from 10% in 2002. Most of you planning 48 or 60 month car loans, or used car loans won't get 0%. Ads say "with approved credit". You either get the low car loan APR or rebate, not both. Calculate which is cheaper. It may be better to take a large rebate over the 0% APR new car financing. Compare to online car loan rates. Pay off your car loan early, saving on interest. Applying the rebate and using your own low-interest financing often gets you greater savings.

Which is better: a rebate or special new car financing?

Use this car loan calculator to answer this riddle. Also, the table below shows a real world example, where you are buying a new car for $19,287, and trading in your old car for $2,000. It compares side by side the 0% APR car loan with a higher 4.39% APR car loan, and shows that even with a higher APR, the rebate saved the most money. Crunch the numbers for your case and see which is best.

Don't fall into the gap!
If you owe more on your car than it is worth, if you lease, or put down less than 20%, you should get Gap Coverage from your insurance agent. Most people call it gap insurance. Try not to buy it from dealers, they charge $500-$700 when it costs 1/2 that online. If you owe $20,000 on your car, but it's only worth $16,000, you're upside down. You wreck the car, or it's stolen, your insurance company gives you $16,000. You must still come up with $4000 to pay off the bank, plus your $500 deductible! Gap coverage protects you against this. The better ones cover up to $500 of your deductible.

Your Deposits And Down Payment
Never pay cash for a deposit on new car financing. If the deal goes south, at some dealers, you'll never get your cash back, but you can dispute a credit transaction. If You need a new card for deposits, and have good credit, try the Discover® Platinum Card or the Discover® Student Card, both have no annual fee. If your credit is so bad and If you're in too deep, maybe now is not the time for auto financing. But don't take on more debt with a consolidation loan, try a debt reduction program instead like the non-profit American Consumer Credit Counseling. You get an interest rate reduction payment, which pays off your balances much quicker than you ever could on your own.

Bad Affect Of Low Credit Scores on your new car financing
Your credit score determines your new car loan approval and APR. If you have bad credit and score is low, you'll pay high car loan interest rates, up to 23%, with a bad credit car loan. If your score is below 720, you might not get those special 0% new car financing rates. Your bad credit score affects how much you pay for car insurance rates. People with bad credit have no clue about this, maintaining your credit score should be an ongoing process, not a rush job when financing a new car. That's the worst time, banks will reject you if you have disputed items on your credit report, until it resolves. It can take 60 days to clean up your credit score, so don't apply for new auto financing until all disputes are resolved and you verified your FICO Score. You have been warned! I have seen people rejected for applying while "in dispute." Then they get stuck with bad credit car loans.

Credit score myths: "I've never missed a payment. My credit score must be high!"
Many people get upset at car loan time when they find out their credit score is low, and they have bad credit. Paying on time is but one of 100 variables making up your credit score. Having many open accounts will damage your credit score, as there is potential for you to spend up to your credit limits. People with good credit have too much credit and old accounts no longer in use. When I got my score it was ok, but by closing half a dozen retail store cards no longer in use, I improved my credit score almost 40 points. Having credit account balances above 50% of the credit limit quickly degrades your score, meaning higher auto financing interest rates and bad credit car loans.

How to increase your car loan approval chances

• If you're a recent college grad, don't apply for new car loans until you're at your new job at least 6 months
• Apply online at car loan sites like Capital One Auto Finance or E-LOAN who don't play games with online car loan rates
• Learn how to repair bad credit yourself, get your credit score to 680 before you apply for new car loans
• Pay down your credit card balances as low as possible, payoff higher APR cards first before applying for car loans
• Don't apply for new car loans if you have bad credit, moved in the last 6 months. Lenders hate nomads, they verify addresses & income
• A previous new car finance or home mortgage on your record helps
• Get a stable occupation like engineer, architect, finance, etc. Self employment is very difficult to get approved
• Haggle with creditors to get charge off's, late payments, other black marks off your credit report before auto financing

Credit card companies say it takes 60 days for paying off your credit cards to show up on your credit report, but who wants to wait 2 months before buying a car? One of our visitors filed a request for investigation of her report stating that the balances on these cards were incorrect, and the investigator looked up her correct balances. She checked 2 weeks later and it was changed. Also, by paying off 2 credit cards from 70% max credit level down to 0%, increased her credit score 100 points. That's the difference between paying 6% APR for a new car loan, and 21% for a bad credit car loan.

Steps to take before you apply for new car loans:

• Get your Credit Score so dealers can't lie to you about your score. Flash it in their face when they lie to you about your score
• Start comparing online car loan rates to new car dealers, use car loan payment calculators
• Close old credit accounts, they are excess luggage dragging down your credit score, but leave your oldest account open
• Remove erroneous previous addresses and other errors off your credit report before attempting new car financing
• Wait until your score goes up to 680 if applying for lowest rate car loans

New car dealer financing is just a product the dealer sells you. Is it a car loan or not a car loan?
New car loans at the dealer are not really new car loans, nor used car loans. They are Retail Installment Sales Contracts (RISCs). Great acronym. The dealer sells the RISC to a bank, often sharing interest rates, so the higher APR they charge you, the more money they make. Unless there is a subsidized low APR from the car maker, you'll usually find lower online car loan interest rates at online new car financing sites like Capital One Auto Finance or E-LOAN. Now you have lower online car loan rates. In the 1990s, we HAD to get our auto financing at the dealer. New car financing is just a product the dealer sells you. You don't have to buy their convenient product anymore. You should never put yourself in a position where you rely on a new car dealer to tell you how good your credit is, you should be telling yourself instead by understanding your own credit report. This way you avoid their bad credit car loans. Subject to new car finance.

Don't Be Fooled By Lower Monthly Car Loan Monthly Payments

When car loan shopping, look beyond monthly car payments. Sneaky dealers quote a lower monthly payment than your bank, but the dealer's car loan might be 72 months, and your bank's car loan is 36 months, a common scam, to get you into a bad credit car loan. Some dealers lie about APR on their car loans, but plugging numbers into a car loan payment calculator exposes the lie. Auto financing is a cat and mouse game. Always verify their numbers, make sure monthly car payments match the selling price and APR that you are expecting to pay. If you can't check their numbers, you have no business taking out a car loan! You have the right to know how much new car loans will cost including interest rate, trade-in value, taxes, and fees, all disclosed in writing. But there are people selling you new car financing who don't want you to know how much you're spending, and divert your attention by pointing out low monthly payments you are comfortable with. The same happens with used car loans. Always car loan payment calculators to verify car loan interest rates and payments.

The Straw Purchase car loan, don't do a co-sign!

This is the dark side of auto financing. A straw purchase refers to a person buying a handgun for someone who is ineligible to own one. That's how the Columbine High School shooters got their guns. With new car buying, the dealer tells you that with bad credit, you can't qualify for the car loan so you need a co-signer. No problem, Grandma will do it for you. But Grandma is duped by the dealer paper shuffle and 2 weeks later you find out there is no co-signed car loan, they wrote the car loan in Grandma's name! This does not help your bad credit. Her name is on the title, and it's illegal for you to buy insurance on a new car that is not titled to you. This is pulled a lot on used car loans also. I hear Texas has laws against Straw Purchase car loans. How To Avoid The Scam: Have both signers present, car loans should have both signatures together. A notice to the cosigner is required by the Federal Trade Commission's Trade Regulation Rule on Credit Practices. With bad credit you should try a cheaper used car, with a used car loan.

Good Sources of Online New Car Financing

For discount new car buying we recommend sites such as Cars.com, InvoiceDealers, CarsDirect, Autoweb, Autos.com, Yahoo!Autos, Edmunds.com, and Car.com and with online car financing, everything from the last time you bought a new car is old school. The easiest way to get pre approved for a car loan is a credit union or trustworthy online car loan sites such as Capital One Auto Finance, E-LOAN, Lending Tree and AutoCreditFinders. Before you buy a car you must have auto financing ready. Once you are pre approved by the new car financing sites, compare online car loan rates to the dealer's APR. If the dealer can beat your online car loan APR, with no cash flow shell games, finance through the dealer. Otherwise use online new car loans. Banks charge a bit more for used car loans, than new car loans.

Advantages Of Auto Financing: Online new car loans and used car loans

Benefits of new car loans from an online car loan company:

• Online car loan rates from sites like Capital One Auto Finance and E-LOAN usually lower than car dealers
• Low APR, No app fees for New Car Loans and Used Car Loans
• Online car loan payment calculators, your auto financing APR is locked for 60 days
• Online new car financing avoids headaches, bad credit car loan scams, and frustration of car dealer auto financing
• car loan approvals are usually within an hour during business hours
• No new car finance hidden fees, points, or prepayment penalties with online new car financing
• New car loan lenders FedEx your check to arrive next day
• When you buy your car, give the dealer a bank draft from Capital One Auto Finance or E-LOAN online car loans

Extended Warranties
As with financing, you must shop for extended warranties before you buy your car so you can compare with the dealer's warranty pricing. For extended warranties, try Warranty Direct. I Review Warranty Direct in detail in the section on How To Buy An Extended Warranty And Avoid Scams. You want to get an online warranty quote before you go to the dealer, so you'll have something to compare the dealer's extended warranty price with. Never show up at a dealer to buy a car without a free quote from an online warranty site.

Alternate Auto Financing: Credit Unions

Credit unions are easier on you than car dealers for new car loans or used car loans, they'll lend you more money at favorable car loan interest rates over dealers, give more favorable benefits than leasing companies. Your credit union can approve you over the phone in minutes, printing your credit report during the call. They'll tell you what car loans you qualify for. I have found often the online car loan lenders rates beat credit unions. Some credit unions don't require a lease security deposit, down payment, other fees, and are generous with lease mileage.

Equity In Your Home Can Fund Your Car Loan
If you have equity in your home, find a home equity loan for down payments with no fees. You can usually deduct interest from home equity loans from your taxes, effectively reducing your APR. Don't borrow more than 75% of your equity. Home equity loans are usually 2% or higher APR than car loans. They might be higher APR than used car loans too. But is some cases the tax savings make up for the higher interest rate. You can have up to 4 lenders compete for your home equity loan with LoanWeb.

Lease Calculators
Read our guide on using ALG Residual Values. You'll need it to calculate your auto lease payments, and look up dealer cost for cars and trucks. Every person leasing autos should use the same type of auto financing tools that new car dealers use. Without it you're sailing the ocean of confusion, and they'll swallow you whole. I would never lease a car without using lease software. Fight fire with fire.

Get The Credit You Deserve
New car dealers know that almost everyone has a bad mark on their report, and they make good use of it with higher APR car loans. Erroneous black marks on your credit file cause you to have a bad credit rating and pay higher car loan rates.

• My friend found 3 errors on his that kept him from approval on new car loans until they were fixed
• My sister moved, the electric company never sent her last month's bill, causing a bad charge off on her credit report

What's on your credit report
Your credit report appears online, and shows who has checked your credit history. Some sites lure you with "free" credit reports, but you must sign up to their paid credit monitoring service to get it. Errors in your credit file put you at a disadvantage when the dealer calls 2 weeks after the sale to say "your new financing fell through, you have bad credit, we need more cash". Then you are stuck with their 21% APR bad credit car loan, all because you did not do your new car finance homework first.

TIP: When filling out the forms for your credit report or anything else online, remember to enter your full email address properly! If your email address is forgetful@aol.com, don't just put "forgetful", you must add the full "forgetful@aol.com", or your request will be denied. They need to be able to email your report to you as a backup. Also, have your drivers license handy, you need the Drivers License #.

Where To Get Your Credit Report Online Experian Online Credit Reports You get a thorough credit report in 30 seconds from one of the big 3 credit bureaus. They are strict about security so if you type one bit of data incorrectly or have moved in recently, you won't be able to get your report instantly. Instead they'll mail it to you about a week later. If you have never seen your report before, you should get the "Merged Credit Report" from All 3 credit bureaus. Banks and dealers typically run your credit report from 2 bureaus.

TrueCredit has your credit report online instantly. Get the 3-in-1 Credit Report With FREE Credit Score if you have never seen your credit report. It has your credit files from the top 3 credit bureaus used by car dealers. Now you'll have the story on what car dealers know.

Equifax Instant Online Credit Reports And Score Power Equifax is one of the big 3 credit bureaus in the U.S. Most creditors who run your credit profile use Equifax, as they are the most thorough. You need the credit score option so you'll know BEFORE going to the dealer. No more dealers lying that you have a bad score, you'll have your FICO Beacon score to slam the door shut on their scam. When you apply for mortgages and car loans, banks get your credit report from Equifax. Using the same credit bureau as banks, you'll be in sync with what they see. The Score Power package includes your Equifax Credit Profile, your FICO score (also known as your BEACON score), plus a personalized analysis with tips on how to improve your score over time, how you rank among other consumers.

Fresh Start: The Authoritative Guide To Consumer Credit Repair If you are stuck with a bad credit car loan,get rejected for credit, or have no credit, get the easy to read Fresh Start book from Horizons Unlimited. This awesome book teaches you, then empowers you to repair your own credit, avoiding bad credit car loans. It walks you through remedies to remove negative credit. Forget credit doctors who scam you out of $600, Fresh Start shows how to do it free yourself. Great tips on analyzing your credit report, disputing bad marks with credit bureaus, negotiating tips, common mistakes, laws that work in your favor, sample dispute letters, credit bureau phone numbers, web sites, addresses, settling bad debts AND getting the creditor to remove them from your file. Get it as a CDROM, as a book, or as an instant download that you can use immediately.

Don't Just Borrow Your Way Out of Debt!
Consolidation loans are DANGEROUS, because you shift all your debt from one place to another, OPENING A NEW CHANNEL OF CREDIT, while freeing up your credit cards. Some idiots proceed to fill up their credit cards again, now they have double the debt they started with, paying up to 22% on their consolidation loan because they weren't paying attention to the APR. Some unscrupulous consolidation companies make it appear they are eliminating your debt, or hide the APR. It's better to transfer you credit card balances to your lowest APR card. Pay more to cards with high APR, send more than the minimum payment, or it will take 10 years to pay it off. If you have cash in the bank earning 2%, it's losing you more to income taxes, so be smart and use it to pay off 18% debt. A home equity loan can pay off credit cards, and write off the interest on your taxes. But you MUST close those cards, or risk running them back up. Try American Consumer Credit Counseling for more info. They don't lend you money, they haggle with your creditors for lower APR, and you combine your payments into one manageable check. We cover all this in much more clear detail on our other site DebtWizards.com

Responsible Use Of Credit Cards
Use the card to buy gas or food, and pay it off in full and on time each month to build solid credit, before applying for car loans. You can't get blood from a stone and the moral of the story is to not get into these situations to begin with. How do people get into these situations? By not taking their financial pulse and making a budget. You must have a spending budget and stick to it. People with bad credit think they have no power to negotiate. That's just how some salesman want you to think. Dealers often charge them full MSRP. These folks, low on self esteem, are often prey to psychological conditioning by salesmen. If you can't afford a new car, research used car loans and think about getting a used car.

"You're a credit risk. Only way to make this auto loan worth it for us is to charge 18%. It's not our fault you have bad credit."
If the dealer learns of your credit woes, they'll say: "This is a great opportunity for you to re-establish your credit rating, since our bank is willing to give you the money." They just want you at 18% APR auto loan. Re-establish your credit on a lower priced sofa or computer.

Auto Financing for First Time Car Buyers And College Students with bad credit

Some dealers have first time buyer/college graduate auto financing programs subsidized by carmakers. Sometimes there is no recent grad new car finance program, they just charge you 18% APR for new car loans. If you have good credit history, there's no reason to pay 18% in a bad credit auto loan, they are feeding off your ignorance and rejection fears. You have the same haggling rights I do, don't let any salesman tell you otherwise. Don't fall for first time buyer "0 down" auto financing ads. You must put 20% down on new car loans, or you'll be upside down on your auto loan. Salespeople tell you auto loans are a way for you to establish credit, but it does not mean you have to pay a high APR on your auto loan. You might try used car auto loans too, since you will be borrowing less money. Use car loan payment calculators to get used to the numbers. If you work at your college, try an auto loan through the credit union, a good place to establish credit. Don't let your parents buy the car cash, or finance under their name, it wont establish credit for you. Pay down your debts and clean up your credit score before applying for a car loan. The key to stability is living where you can afford the rent, even if it's not up to your standards, so you don't have to move. If you move around you become un-creditworthy, and might only be bale to get a used car loan, or a bad credit car loan.

Don't Forget Auto Insurance
You'll be surprised how much some new cars cost to insure. Get your auto insurance quotes before you buy a car, and plan your budget to include insurance. If you're buying a car on the hairy edge of what you can afford, insurance payments will drag you under. Insurance payments are part of your monthly cost of ownership. Read All About Auto Insurance for buying tips, coverage glossary, how to avoid scams, reviews of free auto insurance sites. Auto insurance sites Comparison Market and Progressive Auto Insurance give you free online auto insurance quotes, so be sure to get pricing from them too.

Go On to Chapter 2: Discount Car Buying & Car Pricing On The Internet

Jump to any chapter. I suggest you read each chapter in order.
Chapter 1 Get your credit report, how to get a car loan, scams, online car loans, first time car loans, budget & loan excel spreadsheets, credit repair.	Chapter 2 Reviews of internet discount car buying sites, new car prices, find dealer's invoice cost. Get a new car quote.	Chapter 3 What to bring to a dealership, what to say, how to act, what not to do, what to look for at the dealership, and a glossary of all dealer fees.	Chapter 4 How to read dealer invoices, finding dealer's cost, how much to offer the dealer, buyers offer spreadsheet, examples, trade-ins.
Chapter 5 Negotiating tips, dealer scams & tricks to watch out for, dealing with aggressive salespeople, choosing between rebates or low APR loans.	Chapter 6 Close the deal, avoid needless extras, scams in the business office, extended warranty scams, options, buying warranties online.	Chapter 7 Actual misleading dealer ads, and what to do when you've been ripped off, customer satisfaction surveys, how I bought my Lexus.
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