Bad Credit Blog

People always think about financing too late. They wait until they are ready to head out the door, keys to their old beater car in hand, to drive to the dealership and “shop” for a car. They tell themselves, “I’m just looking today. I want to see what’s out there in my price range.” Without giving any thought to what their “price range” might be!

In fact, for most people “price range” isn’t even accurate, “payment range” is better. People always have an idea of what “payment” they want, and don’t really understand how payments vs. car price work. And that’s where the dealership gains the advantage and can sucker you into a vehicle that costs way too much, with payments that are stretched way too far. Especially if you’re in the market for a bad credit car loan!

As a former car salesperson I sold vehicles with 84 month payments, and one time I sold a car with 92 months! That’s 7.5 years! Why did I do this? Because stretching the payments that long fit my customers budget - and I therefore sold a car and earned a commission. Make no mistake about it. Salespeople have to put food on their table and clothe their kids just like you do! And if that means stretching payments to hold profit on a vehicle then that’s just what they will do! They ARE NOT on your side.

As a salesperson I found, more often than not, it was mostly about the look and feel, and a lot less about the price, for most buyers. By shifting focus OFF the price and ONTO the eye-popping fun features, I was able to make them practically drool for the car, and then it was only a hop and a skip to the next step of “bumping” them up $50 or more than what they originally “budgeted” for in payments.

Pre-approval is what keeps you and your emotions in check. It helps you focus in on the most important thing – how much does the vehicle cost. It helps eliminate the “drool factor” from car buying and keeps you in check so you don’t get suckered into 92 month payments!

Pricing new cars is the simple part. Shopping online is easy. Most dealerships have websites that list their inventory and pricing.

Before you even get to the dealership, or apply for a loan, you should always begin by checking your credit report . I saw many salesmen and managers that would tell the customers outright lies about their credit score in order to bump the interest rates or payments on a car. So pull your credit first!

Once you know your credit score you can apply for a car loan and get pre-approved . Pre-approval is the absolute simplest way to purchase your new vehicle. It tells you how much you can finance, and gives you approximate payments. This way you can shop for the best vehicle that you can afford! Instead of honing in on the biggest, shiniest vehicle on the lot – and getting suckered into payments you can’t afford.

If you have questionable credit and you go to a dealer without being pre-approved, then you are setting yourself up to get ripped off. The dealer will have a million and one reasons why you will have to pay such a high interest rate. It’s true that a person with bad credit will have to pay more than someone with sterling credit - but if you can save 2 or 3 percent you can save between $150 and $200 per month. Quite a savings!!

With Pre-approval you will have the check in your hand ready to endorse to the dealer. Expect them to try to play some games to get you to pay more, just stay the course and you will drive out with a car you can be happy with AND can afford.

I was talking to a friend of mine the other day, who I knew was drowning in credit card debt but working hard to pay it off. When I enquired how things were going he hemmed and hawed and finally told me it wasn’t going very well. He confided that instead of not using their credit cards for the holidays as he had told me was the plan, both he and his wife got into a competing match (it seems) to see who could outspend the other. Now my friend and his wife blame each other for their credit card debt. Any rational person knows this is a recipe for marital as well as financial disaster.

This got my wheels spinning because I have been in credit card debt in the past; maybe you have too and can identify with what I’m about to say. Here are some of the dumbest reasons for NOT getting out of debt.

1. It’s all (his or her) fault. Money is the #1 reason for divorce in this country. Instead of taking personal responsibility they play the “blame” game. One of you needs to provide some financial leadership. It’s not always the man’s job (or woman’s) it’s whoever has the best head for management. The other partner needs to cooperate.
2. Credit cards are the only way that I can get what I need. (Translated: want). What is really needed is a budget. It just takes a little discipline. In other words, you give yourself an “allowance” to spend on things you WANT, then use everything else to pay for everyday living AND to pay off yoru credit cards. If you are in credit card debt too deep then you will benefit from a good credit counselor . Many times this is the only way out.
3. Spending makes me feel so good. I’m not a psychologist but I have read of people that get a high from spending. There’s also a section of people who get the same feeling from shoplifting. If you fit this get professional help. Someone told me that they feel “free” when they spend. They are lying to themselves, they are not free, but rather a slave. Don’t be foolish!
4. If I get too deep, I’ll get another credit card with 0% and transfer the balance. Well, duh! That’s so unintelligent that I won’t comment!
5. I’m not paying “that” much in interest. Oh, really! If you run an average credit card debt of $6,000 - and if that amount remains level for a year and your interest is 21% you are spending approximately $1500 in interest charges alone! AND that’s just for one year. Einstein’s definition of insanity is “doing the same thing over and over expecting different results”. Still think you don’t need help? You need to contact a credit counselor Immediately!
6. I don’t think I can ever afford to retire; besides I love my work. I’m not sure our Creator ever intended us to completely retire as we see it done today. But consider what would happen to you or your family if a disaster should happen. Recently the bottom fell out of the real estate market and property values fell dramatically. If you were laid off your job you may not qualify for a home refinance. Think about that next time you head out to the mall!
7. I’ve lived on credit cards for so long that I don’t think I can live without them. You CAN and you MUST if you ever want to be free. There is nothing wrong with using a credit card occasionally for an emergency. However a night out is not an emergency! If you can’t handle a credit card responsibly, then don’t carry one.

Let me make a confession; I am no different than you, so I don’t carry my credit cards on a regular basis. I carry a debit card only most of the time and always know exactly how much I have in my checking account so I don’t overdraw.

If you need help with your financial world we can help. Whether it’s mortgage refinance or a 1st time homebuyer with no credit or bad credit, pre-qualified auto loan , auto insurance for people with bad credit. Whatever your need, we have answers.