Is it Safe to fill out a Credit Application on a Dealership’s Website?

 

As a result, many people are very weary of filling out a credit application online, particularly on a dealership’s website.

 

Having bad credit can be very stressful. Not only do many people find it embarrassing to some degree, but they also have to constantly worry about whether they will be accepted or not when they are attempting to finance something, such as a car.

 

A dealership’s finance managers will make sure that they make you feel comfortable when you share your credit information with them. It is their job to help find you a payment plan that works best for you. They are also responsible for keeping your information private, so you don’t have to worry about them sharing it with others.

 

Filling out an application online is a good idea as it will save you a lot of time. You can figure out your financing before you enter the dealership, which will put your mind at ease and won’t make the entire car-buying process stressful.

 

Lease or buy a car: What’s the better option?

Guys I wanted to Share an amazing acticle written in the Globe and Mail by :

PREET BANERJEE

Special to The Globe and Mail

Published Tuesday, Feb. 08, 2011 6:14AM EST

Last updated Monday, Feb. 02, 2015 4:25PM EST

You’re shopping for a new car. You know which model you want. But how should you pay for it? Financing it with a loan may require a $600 monthly payment, whereas that very same vehicle could be leased for perhaps $350 a month. (Of course, some people will find a way to justify using that $600 a month to lease a fancier car.)

It’s one of those perennial questions, and everyone seems to have an opinion. The big dangling carrot of leasing is clear: cash flow. The problem, of course, is that if you always lease, you will always have a monthly payment.

Let’s break down the difference between a purchase loan and a lease to the fundamentals.

If you buy a car outright and you don’t have the cash to pay for it, you take out a loan. Let’s assume no down payment. If the car sells for $30,000, you’ll need to take out a loan for $30,000, and you may be charged interest for borrowing that money.

With a lease, instead of borrowing the full purchase price of the car, you are only borrowing the amount the car will depreciate over the term of the lease. With a three-year lease, and the expected market value of $15,000 in three years based on regular wear and tear (known as the “residual value”), then you only have to finance the difference between the purchase price and the residual value. Financing $15,000 is going to have a lower monthly payment than financing $30,000, even with a shorter lease term. This is the basic reason lease payments are lower than loan payments.

So with leasing, you have peace of mind. You also have the upgrade factor: Since leases are generally between two and four years, the vehicles are almost always going to be fully covered by warranties and driving them should be problem-free. These are the best years of a car’s life. Once the lease is up, you get to trade in your car for the latest model. You can keep up with the Joneses.

On the other hand, if you took out a five-year loan to purchase the car outright, your monthly payments would stop after five years. It would be only a matter of time before the break-even point was reached.

Of course, you have to consider more than just the difference between monthly payment amounts and length of payments. Over longer periods of time, there will be major maintenance requirements that need to be calculated into the equation. But, for the most part, a person who drives responsibly and pays attention to routine maintenance is going to come out ahead if they buy.

There is no law that says you have to drive a bought car into the ground. If you want to upgrade, you have the option of selling the car any time. After a few years, there should be equity in the car over and above the balance of the loan, which can be used toward a down payment on the next vehicle.

So, as usual, there is a tradeoff: With leasing, you will pay a premium over your lifetime in exchange for a lower monthly payment and very few concerns about reliability. With an outright purchase, you’re going to come out ahead if you can commit to proper maintenance and resist the urge to constantly upgrade.

For those who think solely in terms of monthly payments, a $0 monthly payment at least some of the time is pretty attractive.

DO THE MATH

Here’s a comparison of leasing and buying the same car for 10 years (in pretax dollars).

Vehicle list price MSRP: $34,000

Lease details: 36 months, 24,000 km annual allowance, $0 down offered at 1.9-per-cent financing and some incentives.

Lease payment: about $520 a month for 10 years, assuming continual roll over to new car at term expiry.

Total financing cost over 10 years: $62,400

Loan financing details: 60 months, $0 down, offered at 0-per-cent financing, miscellaneous incentives.

Loan payment: about $600 a month for five years.

Total financing cost: $36,000

Timing belt, water pump, tensioner in fifth year: $1,500

Replace brake rotors and pads every three years: $1,000 x 3 = $3,000

Miscellaneous parts and labour over 10 years: $10,000

Total financing, maintenance and repairs: $50,500

Potential savings in this example: $11,900 plus the value of owned car at 10 years.

Editor’s note: A previous version of this story incorrectly said that loan payments were $567 a month for five years and that the total amount for financing, maintenance and repairs was $24,500. The numbers have since been corrected.

Preet Banerjee is a senior vice-president with Pro-Financial Asset Management. His website is wheredoesallmymoneygo.com

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Follow Preet Banerjee on Twitter: @preetbanerjee

How to rebuild your credit in 8 steps

I wanted to share this amazing blog written By Miranda Marquit. By following these steps you can gain access to an amazing credit score!!

1. Check Your Credit Report

Know where you are at financially. Check your credit report to see exactly where you need to improve. Do you have a lot of missed or late payments? Is your debt utilization too high? These clues can help you figure out what items to tackle first. You are entitled to a free report from each of the credit bureaus one a year (so, three total). You can visitAnnualCreditReport.com (the official site run by the three credit bureaus) for your free reports.Check your credit report for errors and fraudulent accounts as well. Errors can bring your credit score down. If something is inaccurate, dispute it, and fix the problem. The FTC offers great information on disputing inaccurate information, as well as a helpful sample dispute letter you can use as a template. This can be one of the easiest ways to give your credit score a little bump higher. Don’t forget to bring fraudulent accounts to the attention of the credit bureau and have them removed. If you are concerned about fraudulent accounts and identity theft, can place a freeze on your credit to avoid further identity theft problems. Each bureau has its own procedures, and you can learn more about how to place a credit freeze on your report by visiting the bureaus’ web sites. Understand that a freeze needs to be placed with each bureau individually.

2. Arrange to Catch Up on Your Payments

Payment history accounts for the largest factor affecting your credit score. If you are behind on your payments, you won’t be able to improve your credit situation. Try to bring all of your accounts up to date. If you can’t afford to bring everything up to date at once, you can contact your creditors and work out a payment plan. Be up-front when you contact your creditors, explaining your situation and letting them know that you want to pay your obligation. Let your creditors know how much you can pay, and how long you expect to pay it. In many cases, it’s possible to work out an arrangement that all parties can live with.

3. Pay Your Bills on Time Moving Forward

Going forward, pay your bills on time. This includes non-credit bills. Your missed utility payments and late rent payments can be reported to the credit bureaus. Because payment history is so important, establishing a reliable pattern is vital to rebuilding your credit. At the very least, you want to avoid reports that you are missing payments, or paying habitually late. Consider setting up automatic withdrawals in order to avoid missing payments in the future.

4. Try to Avoid Closing Credit Card Accounts

When possible, avoid closing credit card accounts. The longer your credit history, the better your score. However, if you are very far behind in your payments, you may not have a choice. A payment plan may require you to cancel your credit card. If possible, though, keep your older accounts so that you have a substantial credit history on your side. (See also: How to Avoid Getting Your Credit Card Cancelled)

5. Pay Down Debt

The second most important factor in your credit score is your credit utilization. Your credit utilization is a measure of how much debt you have. It is expressed as a portion of the available credit you are using. If you have a total credit availability of $10,000, and you are using $7,500 of it, your credit utilization is 75%.

If you are using a great deal of your available credit, it can count against you. Create a plan to pay down your debt a little faster. Honestly evaluate your expenses, and cut back. Use the money you save to reduce your debt. Try to get your credit utilization down to 30% or less. If you can reduce your debt, the credit utilization portion of your score will improve, and help your credit overall.

6. Use a Secured Credit Card

One of the best ways to quickly build a payment history is to use a credit card. A secured credit card can help with this step if your poor credit precludes you from qualifying for a “regular” credit card. A secured card requires that you keep money in a linked savings account as collateral. Because the money is already there, it is easier to get approval for a secured card — especially when you have poor credit. In either case, your payments are reported to the bureaus every month, so it makes a big difference in showing that you pay regularly — and on time. (See: Wise Bread’s review of the 5 best secured credit cards.)

An unsecured credit card carries more positive weight, but you might not qualify for an unsecured card right now. If this is the case, begin using a secured credit card. Double-check to ensure that the card is truly a credit card. Prepaid debit cards look similar, but they are not the same thing, and your payment history isn’t reported to the credit bureaus. Ask the secured card issuer if your payments will be reported, and only use a card that will report to bureaus.

After a few months, ask if your secured card can be “upgraded” to an unsecured card. If you stay within your balance, and make your payments on time, it should be possible to transform your secured card into an unsecured card. This will also give your credit score a bit of a boost.

Remember, though, that any credit card isn’t an excuse to spend more money. Whether you get a secured card or use an unsecured card, getting a card just to “free up” more money that you don’t actually have to spend out of control won’t help you in the long run. You have to keep a tight rein on your spending. If you can’t change your habits so that you are in control of your spending, don’t get a credit card, secured or unsecured.

7. Obtain an Installment Loan

Now that you have a secured credit card and are on your way to improving your payment history, you can try to obtain other loans. Part of your credit score is based on the types of account you have. There are two main types of account: rotating and installment. A rotating credit account is like a credit card or a home equity line of credit, where you have an available limit and you free up more funds as you pay down the loan. An installment loan has a set term and a set payment. Auto loans and mortgages are installment loans.

It’s important to be careful with this step, though. If you apply for too many loans, it can damage your score. Instead, you need to plan your credit applications carefully. Start with a small installment loan. You might be able to get a small, low-balance installment loan from your bank. It might also be possible (if you are looking for a car) to get an inexpensive car from a dealer that specializes in customers with poor credit. Your small loan will probably have a relatively high interest rate, so plan to borrow a small amount, and keep the loan term short.

Your installment loan will show diversity in your account types and help your credit score. As you apply, though, keep it targeted. If you shop around, do so over the course of a few days, and your inquiries will be clustered together and considered one inquiry.

8. Practice Good Financial Habits

It can take 60 to 90 days or longer for you to start seeing improvement in your credit score. In some cases, depending on how bad the situation is, it can take two or three years to see solid improvement to your credit history. As a result, it’s important to change your financial habits so that you reduce the chances of poor credit in the future.

Develop the good financial habits of living within your means, setting aside money in your emergency fund, and saving for the future. That way, you’ll be less inclined to skip payments, and you’ll have something to fall back on if you run into financial trouble. Keep with the good habits you formed while rebuilding your credit, and it will be easier to maintain your new, better credit history.