Do you know what your credit score is? It’s very important. Have you heard the ads to repair your credit, to make credit card debt disappear?
I’ve been in the auto business for over 35 years and have to chuckle at those ads. I’d suggest the idea that, since the first thing they ask for when you call is money, you should avoid them. Only in circumstances where the credit card company thinks that they’ll lose everything will they negotiate with you. The key point there being, they’ll negotiate with YOU. What I’ve seen of the credit repair companies is that they either suggest things that are illegal, or they put you on a path that you can get the same advice for, for free.
First of all, the one thing that lenders dislike the most are debtors that won’t communicate with them. If you are unable to make your payment, or the whole payment, contact the lender. The second thing to do is first learn what your score is and also get a copy of your credit report. If your score is less than 650 you need to work on it. Things you can do is pay your bills on time. Especially your loans, credit cards, and rent or house payment. If you have any judgements against you, you should contact the holder of the judgement and try to work out a settlement, or payments if they’ll indicate that on your credit report. You not only need to make your credit card payments, you need to try to whittle the principal down. Another thing that I’ve seen that’s helped folks with poor credit is to get a car loan somehow. (bear in mind, I’m an auto dealer, that’s where my experience comes from) You can get that loan by saving a large downpayment, or getting a co-signer to the loan, or in some cases the dealer might help you. If you can secure that loan, make the payments exactly as agreed. And, of course, you have to have a plan to fix the other problems you have on your credit report.
In summary, your credit score and history are really important. It can cause you a lot of extra expense on future car loans, home loans, and in many cases cause you to not qualify for any loan at all.
We often suggest that a customer should investigate and compare the cost of insurance for a vehicle they are considering purchasing.
There is a guide that every new vehicle dealer is required by law to furnish you a copy of that compares insurance ratings of new vehicles. The government compiles this book using accident data from most accidents. The rating that a particular vehicle has can greatly affect the premium you’ll pay for collision insurance. Remember that if you finance your vehicle you’ll be required by the lender to have collision and comprehensive insurance coverage. Even if you’re not financing you should have those coverages if your vehicle is worth more than you can afford to lose if it was totaled.
So here’s how it works. A police report says that the driver was going 35 miles per hour and hit a parked vehicle. The insurance company pays the claim to fix the vehicles. That data is compiled along with possibly a million other accident claims each year and the circumstances of the accident. They are then able to spot trends where one vehicle costs more to fix in a similar accident than another. This happens because of the way some vehicles are engineered or built and also because of the cost of repair parts. A large percentage of accidents result in the insurance company paying to have the damaged vehicle repaired so they are very interested in the cost to fix a vehicle.
We once had a Mitsubishi traded in. The customer said they couldn’t afford the insurance, it was three times higher than the same size class and value Chevy we sold them. Recently we found a dash assembly required (because the air bags had deployed in an accident) to fix a Chevy was slightly more than $400.00 and a dash assembly for a similar competitive make vehicle was $3,800.00. That’s why insurance premiums can vary so much from one vehicle to another. Remember that if in a certain accident one car costs $5,000 to repair and a different vehicle costs $8,000 to repair, the insurance company is going to charge a higher premium for the second example.
Finally, when there are safety recalls, that can increase your premiums because it’s not always easy to prove if a vehicles system failed that caused an accident.
Last year as part of the restructuring of GM and Chrysler in bankruptcy, approximately 2000 dealers were abruptly terminated, or in the case of GM dealers told that they would lose their franchises no later than October of 2010.
GM and Chrysler claimed that dealers cost them a lot of money. Here’s a good way to look at this. Consider dealers as the only customer of the manufacturers. Also be aware that virtually everything we get from the manufacturer, we pay for. Canceling out dealers would be very similar to a dealer filing for bankruptcy and in the bankruptcy stating that the dealer would no longer sell to people whose last names started with A through the letter D. Less dealers mean less competition and fewer choices for getting service for consumers.
I’ll admit that some dealers might have been too close to one another, but wouldn’t it have been a better plan to allow the market (that means the customers) choose which dealers would survive? Many dealers lost franchises because the manufacturer wanted to combine their brands under one roof. Here’s an example of that: In the Waterloo Cedar Falls area, Holdiman Motor lost their Jeep and Chrysler franchises. Those franchises have already been given to a different dealer who had the Dodge franchise. Even in bankruptcy the Jeep and Chrysler franchises had considerable value yet the manufacturer took them from one dealer and gave them to another dealer. This, I’m pretty sure of, was done with no payment to Holdiman, or charge to the other dealer.
There are rules and laws that protect dealers from manufacturers using such tactics. But in the shroud of bankruptcy they were able to bypass those laws. There are also rules and laws that protect dealers from unfair competition and also require that all dealers pay the same amount for their new vehicles from the factory. Those laws and rules were created years ago to ensure that there were convenient service and price competition available to consumers and that little dealers wouldn’t be unfairly forced out of business. The alternative will be no place but large towns having auto dealers. The big dealers would like that, you won’t….
I’d love to hear your thoughts on this subject.