Questions and Answers

Auto Show realizes that auto financing is an important part of the car buying process. We understand that it can cause some customers stress anxiety and valuable time. With that in mind, we would like to alleviate as much of the frustration, complication and prolonged time frame as we can. Our resources and relationships with the most dominant automotive lenders, banks and Credit Unions allow us to get the car loan that’s best suited for you, at the best possible rates and terms.

If you have had some negative rated credit in the past or at present, we are able to work with you to get an understanding of your credit history and current financial situation. With staff and ownership having over 20 years of automotive experience, we want to be able to offer you solutions that will rebuild your credit rating and maintain it to a level of sustainability for your particular situation.

Some common questions and answers

What does the lending institution base their approval on?

• Down Payment (Down payments are often not required)
• Vehicle specifics (model, style, age, mileage, and cost)
• Application information such as income, time at current job, and time at residence
• Credit History

What is ‘Credit Score’ and what does it mean?
A credit score is designed to assist financial institutions predict the amount of risk associated with a major purchase (car, house credit card, etc.). It of course then, aids in determining your ability to repay the loan.

Will my credit score drop every time I check it?
If a creditor or lender checks your credit, this is referred to as a ‘hard inquiry” and this can drop your credit score. Checking your own credit report is what’s known as a “soft inquiry,” which does not affect your personal credit score. It is best not to have too many different lenders or Auto Dealers do multiple inquiries.

How long does poor past credit history last?
The length that you will be affected by poor credit is dependent on more than one criteria such as your credit score. Your credit score is only one part of the credit approval and car loan process. Your job, your income, your spending habits, all enter into the equation. However, one of the biggest factors will be if you are able to re establish some level of credit, even small amounts. If you are able to keep these payments revolving as per agreement, always on time and even early, this will offer the biggest level of security to a new lender. Some good credit is much better than no credit for future lenders. They are always looking for a pattern of payment and a pattern of behavior that will give them confidence that you will continue in the same manner. Applying for a credit card, and using it instead of cash is an excellent idea. Of course you will have to spend no more than you would if you had cash, and MUST always pay the entire balance off every month. Your situation can be turned around, and if you are purchasing, getting help with the appropriate vehicle and loan selection will assist you in rebuilding your credit as well.

PLEASE NOTE:
Low interest car loans are available for customers with existing loans. We can help you refinance your car loan or adjust the term of the contract. If you’re a first time buyer, a student beginning school, or have never had credit, we can assist you in the loan process and establishing a level of credit which will help you in the future for other major purposes.

Should I finance my new vehicle or use cash?
 “Cash is king” is a phrase that you are probably familiar with, but when contemplating how to pay for your next large purchase, think again. Congratulations on being in the enviable position to use true cash (Money in your checking or savings account) you are doing something right!

Purchasing a brand new (or new to you) vehicle for most people is one of the largest purchases you make in your life next to a home. Naturally, you start asking yourself a million questions: “Is this a reliable vehicle?” “Is it big enough for my family and activities?” Etc, etc… One question we don’t hear in the dealership very often is: “Should I finance my new vehicle or pay cash?” Most likely discussed around the kitchen table instead, and decided before stepping foot in a dealership. Is it misinformation or distrust? I can’t say for certain, but I believe in making an educated decision and hey, if you can save money who wouldn’t want that right?

So why would you choose to take out a loan when you have cash burning a hole in your pocket? Well, if you can grow your money at a faster rate (while using the bank’s money for your vehicle) who wouldn’t want to do that?!

The logic is simple: When you can borrow money at a lower interest rate than you can earn on money you invest, it’s cheaper to take a loan than to pay cash.

I have always been a big believer in making your money work for you. Sure, saving up for a vehicle and not having payments to make every month is nice, but contrary to popular belief debt isn’t always such a negative. The wealthiest people in the world use it all the time when interest rates are favorable, yet still most people are skeptical about taking on debt no matter the situation.

Let’s look at an example, if you take out a vehicle loan for $40,000 over 7 years (84 months) at 4.99% your cost of borrowing (interest) would be approximately $8,400. Flip side would be putting that $40,000 cash into an investment account. Even in a relatively safe balanced portfolio you can expect an average return of approximately 7%. Meaning, over that same 7-year period you would earn about $16,000. That is using a rate of 2% inflation (taking into consideration your money isn’t worth as much seven years down the road as it is today). Now you have netted a gain of roughly $7,600 without clocking in for a single day of work just taking the time to read this article.

Another benefit of financing your vehicle would be to boost your credit rating. If you continue to pay cash for purchases year after year without ever borrowing this can hinder your ability to secure financing down the road. Although it sounds weird I know, and not saying I agree with it, but I hear this comment from lenders quite often. They don’t always see your bank account details or what other assets you have in your possession. If you haven’t borrowed money and shown you can pay it back lenders tend to get leery, and it can then impact the attractiveness of terms a lender might offer. We live in a credit world and one day you may need to finance a larger purchase like a home, cottage, boat, vacation property etc. and if there is a large gap on your credit report in “lending experience” it may muddy the waters a bit for you.

Am I saying it always makes more sense to finance instead of paying cash? No definitely not, but all in all it is worth it to take the time to review the numbers. There is no secret to making more money, but to hang on to it and even have it make more money for you is where some knowledge really helps in making the right decision. In my opinion, if there is a spread of 2% or greater (interest earned versus interest paid) it makes more sense to finance rather than deplete your bank account or even worse take it out of investments.

Complete this simple AUTO SHOW credit application form, and we will get back to you promptly with finance options for your particular situation. If you prefer to phone, you are welcome to call AUTO SHOW any time and just ask for the finance department. We will be happy to review your particular situation or just give you any general information that you may require.

Thank you for letting us assist you at Auto Show.