Credit is much the same way…you don’t start with the lowest rates and the best terms.  You have to prove yourself before someone will give you the rates and terms you deserve.

The 3 best ways I know to build  credit are:

1. Start Small – Start with the least expensive vehicle you can see yourself driving for 18 mos or so.  Remember…this isn’t the car you are going to drive for the rest of your life.  It’s just a car to help build your credit quickly and get the car of your dreams.  Most times you are going to pay a higher rate for you first car.  Paying a higher rate on an inexpensive car for a short term, then finding the car of your dreams makes more sense than paying a higher rate on an expensive car for a long term.
2. Buy Your Credit – Without credit, lenders have no idea how you will perform on your first loan.  Or, If you have already had a chance to build credit and blew it, lenders will be skeptical.  Reduce the risk to the lender and entice them to do business with you by bringing a larger than average initial amount to the table.  What is larger than average?  30% or more.  Not every transaction is the same and not every situation is the same.  There is a human element in almost every lending decision.  Your ability to “sell” yourself to the lender can also impact the ability to secure financing.
3. Borrow your credit – Co-buyers or co-signers are typically designed for parents (sometimes other family members) to help their children get started on the right foot.  The worse the credit the stronger the co-buyer needs to be to secure financing.  Sometimes the co-buyer is used for a lower rate tier as in the case of a good credit borrower with limited credit experience.  Challenged credit borrowers with a co-buyer are the most difficult transactions to finance.  The train of thought is that the good credit co-buyer will cover the loan if the bad credit buyer defaults.  More often than not, when the loan is defaulted by the poor credit buyer, the co-buyer isn’t able to cover the loan and has destroyed a lifetime of hard work. 

There is no “right” or “wrong” answer for which way is the best.  Every situation is different and every buyer is different…that’s the beauty of having options.  The one thing that is certain is…There is not a “Quick and Easy Path” to good credit.

It seems to me, that money down would be a helpful tool to help build or rebuild credit. 
Money down has several benefits…Lower payment, lower interest expense, better equity, shorter finance terms, and better loan
protection.

Money down decreases the amount to finance.  The lower the amount to finance means you get a smaller payment.  Often times $1000 invested up front can reduce the monthly amount or payment by $20 or $25 per month.  Not only will money down reduce your payment, it will also reduce your interest expense.  How?

There are three factors that affect interest expense…rate, time, and amount.  Time and amount affect interest expense the most.  Money down will reduce the amount, which will reduce the amount of interest that accumulates over the life of the loan.  You may also be able to shorten the loan term and save yourself tons of money. You may also have a lower rate if you have a shorter loan and better equity.

Your equity position can be affected substantially depending on the amount you are able to bring to the transaction.  20% of the purchase price or better will typically give you equity in the vehicle very quickly…if not immediately (assuming you are not trying to rollover negative equity from a previous loan).

Term of the loan has one of the largest impacts on your total of payments.  Money down could give you the ability to lower you 72 month term to 60 months or 60 months to 48 months.  Shorter terms could save you thousands over the life of the loan.

Money down will give you more flexibility to protect you, the car, and your credit.  Adding products like GAP will protect you credit if the car gets totalled.  Extended service plans will protect your car and your wallet from unexpected repairs.

Money down is one of the most powerful tools to build or rebuild your credit.  It’s not a weapon to limit your options.  The people with the best credit scores typically have the largest initial investment.  Why?  Because they have good credit and they use an initial investment to protect their credit.

Tips to avoid a scam…

• Don’t agree to arrange shipping.
• Never let your vehicle leave your possession without payment in full.
• Only accept funds in the form of cash or cashier’s check.  Cashier’s checks can be forged.  Make sure you are able to verify the funds and the check can be cashed.  Out of state checks (of any kind) should raise a red flag and require special attention. Cashier’s checks from outside the United States are almost always fake and should not be accepted.
• If you decide to accept a cashier’s check…never accept a check that is written for more than the agreed sale price.  A check written for more than the amount is always a scam and you will lose your car and your money.

Scammers print a faulty cashier’s check, written to you, for an amount larger than your sale price.  Typically the story goes something like this….

“My bank wrote the check for too much.  Can you just write me a check for the difference?” or

“My bank wrote me a check to cover the price of the vehicle and the taxes.  Can you just write me a check or give me the difference in cash?”

The scam has been practiced and rehearsed many times, so the buyer probably sounds legitimate.  No matter how good the story is…don’t accept a check for more than the agreed price.  If this ever happens…refer them to a local bank or check cashing facility and suggest they cash the check then pay you the correct amount.  A legitimate buyer should not have any challenges with your request. 

Want to sell your car instead of trading…Click Here for More Info.

The first thing to understand is that all dealerships are going to offer you wholesale (for a car they don’t plan on keeping) or trade-in value (for a car they will resell).

For many dealerships, wholesale is another profit center for the dealership.  Meaning they can give you $x and sell it wholesale or at auction for $y.  The Super Car Guys use this opportunity to Help People above and beyond any normal car guy.  We will never appraise a wholesale car (that we don’t plan on keeping) for a profit.  We believe the extra money we put into your trade, will be the difference between a Normal Car Purchase and a Super Car Purchase!

If you vehicle is a trade the dealer plans on keeping, the dealer will typically give you trade in value and sell that car for retail value.  That is how we pay our employees, pay the utilities, support our community, pay any reconditioning costs, clean-up fees, provide a warranty, etc.  Every dealership has a different set of guidelines they use to value a trade-in they plan on keeping.  The Super Car Guys research the book values (both KBB and NADA), research the Internet, call several buyers, ask the Magic 8 Ball, check Ebay, check craigslist, basically, gather all the information we can about your trade in.  We will give you all the information we have and the most aggressive value for your vehicle, then let you decide if it makes sense to trade your vehicle.  If it doesn’t make sense, then don’t trade your vehicle.  Maybe it makes more sense to sell the car yourself.

When is the right time to sell my vehicle instead of trading it?

• If your vehicle has an outstanding balance (loan) that is too high to uncover by trading.
• If you don’t like our trade in value.
• Need more money out of your trade to accomplish a certain price or payment.

Where is the right place to sell my trade in?

• The classifieds in the local paper.
• Craigslist.
• Ebay.
• Auto Trader.
• Cars.com.
• A sign in the window.
• Park it on a street corner or busy intersection with a sign.

Several drawbacks to selling your own car is the time, the expense, the inconvenience, uncertainty, people coming to your house, people driving your car, getting paid, etc.  Many people don’t factor in the amount of effort it takes to sell a car. 

• The classifieds in the paper can be very expensive.   What days are the best to run the ad?
• Craigslist is free, but you never know what your are getting yourself in to.  Spammers use craigslist to gather email addresses, phone numbers, etc.  It’s easy to get lost in the volume of listings on craigslist.  There are tons of scammers using craigslist everyday to take advantage of someone.
• Ebay is expensive and inconsistent.  Sometimes it works and other times it doesn’t.  It takes a long time to craft a well written description and post photos of your car.
• Auto Trader and Cars.com are huge national online classifieds.  Your ad can be expensive to place, hard for buyers to find, and time consuming to post.  If your description is worded wrong, your car may never show up in searches.
• Thieves find a car with a “For Sale” sign parked on a corner or an intersection an easy target…they know you aren’t around.
• Signs in the window are hard to read and they aren’t very effective.

The biggest drawback to selling your car yourself is the risk you take.  Most people don’t realize the amount of risk they take with something as simple as selling a car. 

• Bringing people to your house could be exposing your home and family to potential thieves.
• People you don’t know are driving your car on your insurance.  What if they steal your car?  Or worse…What if they wreck your car and injure themselves or someone else?
• Meeting at a neutral place is the best policy, but inconvenient.
• Getting payment can be tricky…checks may bounce or be forged.  Even “cashier checks” can be fake.  The most popular online scam is…”the bank made the check for too much.  Can you just give me change?”
• Someone may damage your car while driving it.
• Negotiating can be tricky and intimidating if you don’t do it regularly.

Learn about the most common scams and how to protect yourself.

What is the right car to sell?

• Inexpensive vehicles that are mechanically sound.  Usually between $2000 and $5000.
• Hard to find or specialty vehicles.
• Inexpensive imports…usually under $10,000.

What are the benefits to trading my car?

• It’s easier and saves you a bunch of time.
• The dealer takes all the risk to sell your car.
• You save sales tax on the purchase of your new car (in Kansas).  Since we only pay sales tax on the trade difference, the lower the difference, the lower the sales tax.
• Better financing rates and terms.
• Better “deal” on the vehicle you are buying.  The best dealerships know, if there is a trade in, they can sell their car for less.  If we know we can sell your car for a profit, we don’t have to pay someone to replace the car you bought.  We can earn a profit by helping another family with your old car.

Remember, the choice to trade your vehicle or sell it yourself is always yours.  The Super Car Guys are here to give you a better buying experience than the Normal Car Guys.