When you have found the car of your choice, whether it is new or a used car, you will probably need vehicle financing as well. This can become a real problem when it comes to pay on your vehicle. The easiest way to get a loan on your vehicle is through the banks with you being the only signer on the loan agreement. This type of loan is very straightforward and is based on your credit record. However, not everyone is as lucky to get a loan like this and have to revert to the dealership for a loan. But you have to make sure the loan received from the dealership is legitimate and that you are held accountable in order to improve your credit rating.
There are a couple of things you need to watch out for when obtaining a loan from the dealership:
- Co-signer loan from the dealership
Watch out for the co-signer loan because if not handled properly it can turn into a major problem. It is fine if the dealer tells you your credit score is not good enough and you will have to get a co-signer in order to get your loan. However, the downfall comes when the dealer tells you to sign now and get an aunt or older sister to co-sign later. What happens then? The dealer switches and when your co-signer comes he or she signs a different contract with the same terms and amount, but now the loan is no longer in your name but in your co-signer’s name. Now you make the payments without it affecting your credit score. Perhaps you want to get insurance on the car but now your aunt or sister is unwilling to put you on their insurance. Technically you are not the owner of the car and that complicates every decision concerning the car. Therefore, when you are buying a car that requires a co-signer make sure that you are both there at the same time, signing the same contract. The contract should read that you are the purchaser and the co-signer your designated person.
- If you are financing a new car but there is still an outstanding balance on your old car make sure that the final balance gets paid off. It frequently happens that when the dealer is suppose to get the paid off figure to pay off the old car, the loan is on the new vehicle and several months later you get a surprising letter stating that you still owe the outstanding balance on your old car.
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