Month: January 2018

Best Time To Buy A Car With Bad Credit

If your credit is subpar, you might think that it is impossible to be approved for a car loan. Even some Buy Here Pay Here lots might have already turned you down.

While there are steps you can take to improve your chances for approval, there is something you might not have considered. WHEN you shop for a vehicle can also affect how likely your loan application will be approved.

 

When Should I Buy A Car?

 

Shopping for a vehicle with bad credit can be a frustrating and even embarrassing experience. However, if you’ve decided that “now” is the right time to buy a car it is important that you know when to shop.

Weekdays

It might be more convenient to browse dealerships and BHPY lots on the weekend, but this is a time you’ll want to avoid. Other potential buyers, with higher credit scores, usually end up with the best deals. Dealerships are also less likely to approve your loan, when they already have customers applying with a lower default risk.

If you don’t need to purchase a vehicle “right away”, you might want to wait until the last week of the month.

Auto dealers are often trying to meet end of the month sales totals, which could increase your chances of driving off in a new vehicle.

 

Labor Day

This is one of the best times to buy a car, even if your credit is less than perfect. While you probably won’t be approved for a brand-new vehicle, you could drive off in last year’s model.

Labor Day is typically when the new model year vehicles arrive, and dealerships need to make space for them. Your subpar credit might exclude you from some of the low financing deals, but you could have a better chance of being approved.

One tip to improve your chances is to bring a down payment or co-signer.

 

Christmas and New Year’s

According to Edmunds, vehicles are often discounted up to 6.1 percent in December. This can mean significant savings for consumers. Dealerships are hoping to meet their year end sales goals, along with clearing out older models.

You can also find great deals during Black Friday, but your credit might prevent you from buying a new model.

 

How to Buy the Right Car

 

Now that you when to buy an automobile, how do you know it’s the right one? To ensure that you aren’t “talked” into the wrong car by an overeager salesperson, here are a few tips.

  1. Have a set budget

Do Not go into a car dealership without knowing exactly what you can afford. The last thing you want is to have a repossession on your credit report due to an inability to make the monthly payments.

Most financial experts recommend spending no more than 25 percent of their average monthly income.

This should include all costs associated with the vehicle including payments, maintenance, gas and insurance. Edumonds.com or Kelley Blue Book can help you determine an estimate.

  1. Narrow down your choices

Research any makes and models you are interested in, before heading to the car lot. Not only will this significantly shorten your shopping time, it will help prevent you from choosing the wrong vehicle. Try to pick models that are listed at least 5 percent below your budget. This way you will still be able to afford upkeep, insurance and gas.

  1. Know the vehicle’s price

This can be especially important at Buy Here Pay Here lots. There are some unscrupulous ones that raise the sticker price before placing it “on sale”. Kelley Blue Book will be an invaluable resource in helping to ensure that you get the best deal on the automobile.

  1. Pay attention to all the advertised deals

Whether your car shopping on Labor Day or at the end of the year, pay attention to the deals that advertised. Car lots are competing for your business, often even if you have bad credit.

Don’t take the first deal offered, unless you are sure it is the best one.
  1. Don’t rush the test drive

If the dealership won’t allow a test drive, Do Not accept any offers. Chances are the vehicle is a “lemon”. You want to take your time on the test drive. It is important that you get a feel for how the vehicle handles and rides. Play with the various functions, and make sure that this is something that you’ll want to drive every day.

Besides, some problems don’t become apparent until the engine has a chance to warm-up.

  1. Negotiate the best deal

Don’t be afraid to negotiate, even if you have a low FICO score. There is always the chance that you can get a better deal on the vehicle. If another BHPH dealership has a similar model at a better price or offers a lower interest rate, see if you can’t get the same deal on the vehicle you really want.

 

Buy with Confidence

 

You can shop for a vehicle with confidence, even with poor credit.

Along with having the necessary paperwork, down payment and possibly a co-signer, you also know the best time to buy an automobile. You might have to wait a little longer than anticipated to find the best deal. It will also require some research and financial planning.

In the end you will be glad that you did, when you are finally driving a vehicle that fits your needs and budget.

 

 

Can Store Credit Cards Help Repair Credit Scores?

Are you thinking about using store credit cards to help boost your credit score?

Opening a merchant charge account is usually quick and easy. You often receive discounts on your first purchase, just for applying. While paying the monthly balances can help rebuild your credit, these cards can also hurt it.

 

Advantages of Store Charge Cards

 

There are several advantages that often come with merchant credit cards, and make them an attractive option for many consumers.

  1. Exclusive offers and discounts

The initial discount offered, when you sign-up, is one of the main reasons consumers open store credit accounts. These can average from 15 up to 30 percent, depending on the item. On some large purchases, this can result in significant savings.

A survey by credit.com found that over 28 percent of shoppers applied for an in-store charge card at the counter, before completing their purchase.

Some retailers also offer ongoing discounts to their cardholders throughout the year.

  1. Easy access to credit

When you are trying to rebuild your credit, getting approved for a traditional line of credit is difficult. Retailers often do not have the same criteria for approval, especially since their cards come with a spending limit.

If you need to purchase an item that you can’t afford at the time, a card offered by the retailer might be the best option.

  1. Help rebuild credit

Retail charge accounts can help you raise a low score, but only if the activity is reported to the main three credit bureaus. (Experian, Equifax and TransUnion)

To rebuild your credit with an in-store line of credit, you Must make every monthly payment on time. Failing to do so, will cause your score to drop. The missed or past due payment can also stay on your credit report for up to seven years.

 

Disadvantages of Retail Charge Cards

 

These cards might seem like an ideal way to start repairing your credit, but they can come with a few disadvantages. Knowing what they are, before applying, can prevent you from potentially lowering your score even further.

  1. High interest rates
Surveys conducted by CreditCards.com found that the average interest on major retail cards was 25 percent, and 16 percent on ones issued by a bank.

This is a significant difference, especially if the balance due isn’t paid in full.

If you only make the minimum payment each month the accrued interest could cause the final cost of your purchase to double, even with the initial “signup” discount.

  1. Limited places of use

You can find some retail cards that are part of the Visa or Mastercard network. These can be used anywhere the logoed cards are accepted. Usually, you will only be able to use it in the store that issued it. This limits what you can use the card for.

Referred to as “close-loop cards”, applying for one might only be beneficial if you make frequent purchases at that store.

  1. Few rewards

Typically, there are a few rewards and incentives offered after the first discount. The only drawback is that they usually must be used at that store. If you are a frequent shopper, it might be financially worth it.

If not, you might want to consider applying for a secured credit card.

  1. Credit limits are lower

Credit utilization is an important part of your score, especially if you are trying to rebuild it.

Financial experts recommend keeping a usage rate below 30 percent on all types of credit cards.

This can be difficult when it has a low limit. If the card has a $1,000 limit and your balance due is $500, the utilization rate is 50 percent. This can cause your score to drop, instead of raising it.

Cards with higher limits can have a lower rate of utilization, but they can also be harder to get if your score is subpar.

 

Repairing Your Score with a Retail Credit Card

 

Retail charge cards can help you rebuild your credit, if you know how to use it. These simple tips will ensure that you don’t overspend, and they can even show you how to add a few points to your FICO score.

  1. Don’t overspend

Just because you now have a line of credit at your favorite store, doesn’t mean you can buy everything you want.

Stick with your normal spending patterns.

Only use the card for items you need or were already planning to buy. This way, you can take advantage of the discounts and still be able to pay the monthly balance.

  1. Pay the balances off

It is crucial to make the monthly payments on time, late and missed ones will hurt your score. Whenever possible, pay off the total balance. This way you’ll avoid the high interest rates.

While making the minimum monthly payments can will help build a credit history, interest will be added until the total amount due is paid off. Over time, it can quickly add up.

  1. Regularly use the card

You don’t want to run-up the card’s balance, but you still want to use it often. Frequent use combined with on-time payments can boost your score, and build a strong history. If the card isn’t used, eventually it will be marked as “inactive”. This won’t hurt your score, but it also doesn’t help it.

  1. Pay attention to your credit utilization

This rate is an important part of your overall score. It is used to determine “creditworthiness”, and will be affected by the use of your retail card.

Credit utilization rates are calculated by how much available credit you’ve used, divided by the limits. Optimally, you want a usage rate below 30 percent. This can be difficult if the retail credit card has a low limit and you’re carrying a high balance.

You’ll want to keep this is mind, every time you use an in-store credit card.

 

In-Store Credit Cards Can Be Worth It

 

There are drawbacks to retail charge cards, but they also have several advantages. They can help you make necessary purchases not affordable with your available funds, save money and even repair poor credit scores.

If not used responsibly, they can also cost money with high interest rates. They can even cause your score to drop several points.

Before you succumb to the pressure at the register and apply for a retail credit card, consider how it will affect you financially. If you decide that it is something that will help you, then these lines of credit will be worth it for you. When used responsibly, they can even help you rebuild your credit.