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Car Financing 101


UNDERSTANDING FINANCING YOUR CAR

Most consumers need financing to buy a car. The most common type of car financing is financing obtained through, or from, a dealership. Most dealership financing involves a contract with the dealer. Consumers also may arrange for their own loan over the Internet or directly from a finance company, bank, or credit union.

RESEARCH TO DO BEFORE YOU ARRIVE AT A DEALERSHIP

1.  Determine how much you can afford.
2.  Get a copy of your credit report so you are aware of what creditors will see. Any negative information can affect your ability to get credit and/or your finance rate. And if there are any errors, you can have them corrected or removed from your report. Information about how to contact the major credit bureaus is included at the end of this brochure.
3.  Find out your credit score (www.myfico.com).
4.  Identify the type of car you need.
5.  Check buying guides, the Internet, and other sources to find out the price range and other information for the car you want to buy.
6.  Compare current finance rates being offered by contacting various banks, credit unions, or other lenders. Compare dealer quotes and non-dealer quotes; there may be restrictions on the most attractive rates or terms from any credit source.

FINANCING WITH THE DEALER

Your dealer may be able to provide special manufacturer offers, such as reduced interest rates or cash back on certain models. You may see these specials advertised in your area. Make sure you ask your dealer if there are any special financing offers or rebates for the model you want to buy.

AFTER COMPLETING THE PURCHASE

? Be aware that if you financed the car, the bank, finance company, or credit union that holds the contract has a lien on the car until you pay the contract in full.
? Make your payments on time. Late or missed payments incur late fees and affect your ability to get credit in the future.

IF YOU ENCOUNTER FINANCIAL PROBLEMS

? Talk to your creditors if you experience difficulties making your monthly payments.  Explain your situation and the reason your payment will be late. Work out a repayment schedule with your creditors and, if necessary, seek the services of a non-profit credit counseling agency.
? Know your obligations. If you fail to make your payments as agreed, a creditor or assignee may have the right to repossess and sell your car to pay off any outstanding balance on your account. If the car is sold for less than what is owed, you may be responsible for the difference.


GETTING YOUR CREDIT SCORE AND A COPY OF YOUR CREDIT REPORT

You can get a free copy of your credit report with your credit score once each year by contacting the following:

Web site: www.annualcreditreport.com
Phone: (877) 322-8228

You can also obtain your credit information by contacting one of the three major credit bureaus or the Fair Isaac Company:

Equifax Credit Information Services                      Experian                                               TransUnion, LLC            
P.O. Box 740241                                                     P.O. Box 2104                                        P.O. Box 1000
Atlanta, GA 30374-0241                                          Allen, TX 75013-2104                             Chester, PA 19022-1000
Phone: (800) 685-1111                                           Phone: (888) 397-3742                           Phone: (800) 888-4213                          
Web site: www.equifax.com                                   Web site: www.experian.com                  Web site: www.transunion.com


Fair Isaac Company - www.myfico.com


Source: Understanding Car Financing by IFS