Classic Cars Chevrolet

I knew I’d finally made it in my career when I had a credit card with a high enough limit that I could purchase a car with it. Of course, just because you can do something doesn’t mean you ought to do it.

The obvious problem with car auto financing with a credit card would be the interest rate. You can usually get a much lower interest rate on an auto financing loan than you can get with your credit card. Unless you have cash on hand enough to immediately pay off the credit card, it’s probably not a good idea to use it to buy a car.

On the other hand, if you have cash to pay for a car and get a points reward or a cash reward for every dollar you use on your credit card, it might seem like an attractive option.

Unfortunately, many dealerships won’t let you put a car on a credit card. There are a number of reasons for this, but usually the dealer has to pay a fee, sometimes as much as 2% of the transaction. This may make the dealer less likely to offer a lower price to begin with.

There’s also the risk, of course, that you’ll be tempted not to pay the entire car off. Then, you’re stuck with a high-rate credit card bill that will almost surely cost you more than if you had financed, and will definitely cost more than if you’d paid cash.

If you are thinking about buying a car with your credit card, make sure you weigh your choice carefully.

As you can imagine, the financial crisis the world has experienced lately has affected car auto financing. Here are some of the changes you might see when you get ready to finance a new vehicle at your New Jersey auto dealers:

• 100 percent financing deals are scarce. Many lenders now want a down payment of between 10 and 15 percent, even from people with good credit.
• Fewer consumers will qualify for zero percent financing promotions. Unless your credit rating is extremely high, you may have to pay a regular interest rate between 7 and 10 percent.
• Lower trade-in values. Dealers are more cash strapped than before, and less willing to take a risk on whether they can sell your car after you trade it in.
• Smaller inventories. In the same way that lenders have put restrictions on consumer loans, they’re clamping down on dealer loans that let dealers get inventory.
• Fewer dealers. Even some of the largest dealerships in the country have been wiped from the map due to the economic crisis.
• Harder credit requirements. Unless your credit rating is way above average, you will probably have to pay a higher interest rate than before.

Ever since I was a small boy, I can remember dreaming of buying my own Chevrolet. You see, I grew up in Michigan, not too far from one of the Chevrolet plants near Flint. For us, in those days before Toyotas and Hondas could be found on the streets in droves, owning your own Chevrolet was something of a status symbol. It meant you were an adult, that you had arrived.

Of course, I also remember struggling to figure out how I was going to pay for that first Chevrolet. Back then, only companies leased vehicles, so I didn’t really have that option. I’d just landed my first copywriting job, and I had a little bit of an advance to work with. So, I drove my old rusted out pickup to the Chevrolet dealer, plopped down the advance, and managed to convince the auto finance manager to let me have a loan for a 1992 Chevrolet Camaro.

Things may be different today. Auto financing is much harder to come by, and the Camaro is only just now returning to the Chevrolet lineup. Still, I’m proud to say that my kids talk about how, one day when they grow up and get a job, they’ll go down to one of our local NJ car dealers and buy their own Chevrolet.

Quite frankly, it makes me proud.

If you’re in a pinch when it comes to your credit rating, you’re not alone. I’ve been there. Many people have been there. One statistic recently published suggested that at least 25% of all Americans have credit difficulties.

The good news here is that there’s credit available for auto financing, even if your credit report has some challenges. On top of that, there are things you can do to help make sure you do get the best credit you can.

Here are some things I’ve done over the years when getting ready to finance a car that might be able to help you:

• Review your credit history. Get a copy of your credit report. Just because you don’t have perfect credit doesn’t mean your report doesn’t have errors. It could be your credit report makes it look worse than it actually is.
• Know how much you can pay. Go into the car financing situation knowing how much you can afford, both in terms of monthly payments as well as the down payment. Stick to that number once you’re at the dealership, too.
• Keep your documents together. Have proof of employment or income at hand. If you’re self employed or run a small business like I do, keep copies of a couple years worth of tax returns handy.