Shopping For A Car? Don’t Get Taken For A Ride!Written by James H. Dimmitt
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Here's what can happen behind scenes: a bank approves an interest rate, dealer tacks on additional percentage points as a kind of service fee and then dealer and lender split difference. To be fair, not every dealer is guilty of this markup. However, enough are involved that many states are now considering new "truth in advertising" lending laws. New laws would require auto dealers to inform customers of original rate offered by bank and what dealer is offering to customer, after tacking on their additional finance fee. Shopping around with your bank, credit union or internet can help you to find interest rate that you qualify for in a loan. Remember, auto dealer is in business to sell cars, not to offer loans. The next time you're in market for a car, don't just research model, make, and add-ons. Research fair interest rates as well so that you'll know if you're getting best rate possible from auto dealer or if you're being "taken for a ride."
Author: James H. Dimmitt James is editor of "TO YOUR CREDIT", a weekly free newsletter. Subscribe to the newsletter by visiting http://www.yourfreecreditreportnow.com. He is also author of “Identity Theft - How to Avoid Becoming the Next Victim!” available at http://tinyurl.com/bc45
| | Why Bad Credit People Pay Higher RatesWritten by Dave Czach
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Now let's flip perspective back to lending. In above investor example, replace words investor with lender, yield with interest rate and annuity with mortgage loan. Now we see a more clear picture. Borrower A who pays in full and on time every month is a low risk and receives lower interest rate because lender is relatively assured of receiving their money. Borrower B is a much higher risk and pays higher interest rate because lender is accepting chance they may not be repaid all their money. Now let's take it a step further. Imagine you had $100,000 to invest and had to choose between Borrower A and Borrower B. Which one would get your money? Moreover, why not loan $100,000 to Borrower B at same rate as Borrower A? Afterall, "B" borrowers often claim they no longer have same problems that caused their delinquency. "They turned a new leaf." Yet, they haven't proven it. They still pay their bills late. Would you take them at their word and give them same rate as Borrower A? A true investor would not. In conclusion, it's as simple as risk and opportunity. Contrary to divisive manipulation of data from media and organizations with an agenda, people with credit problems pay higher rates because they are a higher investment risk - period. It has nothing to do with race, religion, ethnicity or national origin. From my experience in mortgage business, loan officers only care about one color - green! © 2003 SonicPoint.com
Dave Czach has 12 years experience in the mortgage business plus a Bachelor's Degree in Real Estate. This article may be reprinted without compensation provided there are no changes whatsoever to the article, the copyright notice and the complete Editor's Note. Any reprinting or duplication without these conditions is copyright infringement.
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