One of the most common questions we get asked is, “What is my rate?”
This is an important question because it determines what portion of your payment is going to buying your vehicle and what portion is going to make your lender more money.
This is important: You, the lender and the person who did your paperwork are the only ones that know what your rate is. The person that did the paperwork will not remember your rate in 20 minutes. If you have previously had bad credit and the only options available to you have rates in the 20s and 30s, do not be ashamed or saddened; YOU GOT APPROVED!! Next you need to make sure that the loan is open so you can pay it off whenever you want. Ensure there are no penalties for early payout and that the lender reports to the credit bureau.
The reporting to the credit bureau is key. Regardless of the rate, lenders want to see that you can make payments on time. Making those payments will improve your credit score and the history along with the improved score will allow you to trade in your vehicle and get a better rate or renegotiate your rate with your lender.
You are not locked into the full term of the loan. You can trade out and adjust your rate. Typically, if your rate was 31.9 per cent to start, after 8 to 12 months, assuming all of your credit remains good, you can trade in and anticipate a new rate of about 20 to 24 per cent.
Eight to 12 months after that, assuming all of your credit remains good, your anticipated rate would be in the area of 12 to 20 per cent; 8 to 12 months after that, assuming all of your credit remains good your anticipated rate would be in the area of 8 to 15 per cent; 8 to 12 months after that, assuming all of your credit remains good, you would now be able to negotiate the 0 to 5.99 per cent rates for Prime credit. You have now “purchased” a new credit rating by financing cars over 32 to 48 months, as opposed to the 84 months people will say you need to re-establish your credit.
Who knew that vehicles could do more than get you from point A to B?
As the only remaining locally owned and family run dealership in Port Hardy, we at E.J. Klassen Motorcade want to help our community to continue to grow and improve. We want to help you fortify your credit against future dilemmas.
Remember, this is your credit, your money and your future. There are no silly questions. Read contracts, read pamphlets. Ask questions, ask for clarification if you do not understand something. Credit is potentially a long-term commitment; knowing what you are signing up for is important.
Feel free to come by anytime and we would be happy to look at your situation and see what we can do.