You May Be Paying More Than You Should
Suppose you are driving up a hill and . . . you look over to the right and there you are, in the same car, with the same features. Upon closer inspection in front of the radio is what looks like a taxi meter. You look into your own car and behold, you have one too. But yours is going faster. That meter is the money flying out of your pocket for your car payment. So why am I spending more than me over there? Look in the rear view mirror, your credit score is written all over your face and it is a 650. Not bad, but nothing spectacular.
Look into the next car, you have a 750 credit score on your face. Now your talking! What does this mean in the real world? The best credit has the most flexibility of whom will service your loan. Here’s more of a real world scenario. Suppose you want to buy a one year old Chevy Corvette LT1 at the upper end of the spectrum or a Chevy Cobalt LT at the low end. Mind you, this is with some shopping around. A typical 650 score might get a 10 per cent loan, a 750 score 4.9 per cent. The Corvette could work out in the range of $948 versus $838 with the better score for buying the car in 60 months. This is not a lease. You own the car after 5 years. The Cobalt works to $327 versus $289 for also a 60 month lease. (Unless you can write off a lease on your taxes, I always prefer owning my own vehicle.)
Now, I don’t know about you. But over $100 savings for a Corvette or over $35 a month for a Cobalt sounds like a really good reason to me why you should get that number on your face improved to at least a very good score. Translate that to a 60 month term, the longest term I could find that could flexibly be negotiated, and you could be driving yourself a bargain. A shorter term will mean even less interest paid. Also, notice how I mention a one year old new car. Translation – car dealerships will move almost any car off the lot for potentially even cheaper than what I have mentioned. To put the shoe on the other foot, if you owned a car dealership, a one year old car can not make you as much money as a current car, so the customer can always negotiate the sticker price. Personally, I like stacking the chips in my favor whenever I can. Happy driving!