Drive Away With A Good Deal

(ARA) - With interest rates at all-time lows, consumers are taking advantage of the long-term savings on big ticket items like cars. If you’re one of the many people who are planning to buy or lease a new car, make sure your finances are in order so the purchase process is hassle free.

First, do an honest assessment of your current financial situation. Can you really afford to buy or lease a new car, or does it make more sense to get as many miles as possible out of your current car? Despite low interest rates, a new car isn’t a bargain if it means you’ll be turning to credit cards to pay other bills. You know the details of your expenses and budget better than anyone else. Doing your homework before you shop will enable you to set a payment you can live with.

Once you can say for certain that new car payments fit within your budget, you need to turn your attention to your credit rating.

Lenders will use a report from one, two, or all three of the credit reporting agencies to assess your creditworthiness, so your first step should be reviewing your credit report(s) for accuracy and for any information that may hurt your chances of getting a loan. The information on the credit report can also affect the interest rate the lender will give you. The easiest way to get a copy of your credit report is from an online service like www.creditmatters.com.

If you find inaccuracies on your credit report, you should take steps to correct that information before you apply for a car loan. Look for obvious mistakes on your report, such as credit card accounts that aren’t yours and closed accounts that have not been used for more than seven years, but are still showing as open. You can dispute items that you feel are inaccurate with the credit reporting agency by following the directions included with your credit report.

If you have a large number of credit cards, you may want to consider canceling some of your accounts. Lenders may look at these open credit accounts as potential debt. Likewise, every time you apply for credit, lenders will more than likely request a copy of your credit report. Multiple inquiries from lenders or creditors can lower your credit rating, so minimize the number of inquiries to your report until you get your auto loan.

If your credit history isn’t as good as you’d like, there are no quick fixes, but time, as they say, is on your side. Many lenders focus on the past two or three years of your credit history, so with a plan and some patience, you can boost your credit rating. Take control of your credit by paying bills on time. Cancel any credit cards you aren’t using or minimize excessive amounts of available credit, which could tempt you to buy things you can’t really afford. Gather all your bills and draw up a budget that allows you to pay them off one at a time, focusing on the account with the highest interest rate first.

Having a co-signer may make it easier to obtain a loan if your credit is not perfect. But before you ask a friend or family member to co-sign, be sure you both understand what that entails. A co-signer is guaranteeing this debt. If the borrower does not pay, the co-signer may have to pay up to the full amount of the debt, and if he or she can’t pay in full, their credit rating will be adversely affected. Additionally, late payments will go on both credit reports.

Even though you would never put your co-signer in this position on purpose, consider what would happen if you lost your job, for example. Are you willing to risk your relationship with your co-signer for a new car?

Buying a new car should be fun and exciting -- you get to pick the make, model, color, and options. Arming yourself with the facts ahead of time will help take the hassle out of car buying and put a smile on your face as you drive off the lot knowing you got a good deal.

For more information on taking control of your credit rating, visit www.creditmatters.com.

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