AutoSalesCredit.com

In the past 100 years Americans have purchased vehicles for their personal use in bigger and bigger
percentages each year. Everyone in America with a drivers license (and many without one) want their
own vehicle to drive. Personal transportation is probably more a important purchase than a home to most
people. However, even though the average cost of vehicles has steadily increased over the years, demand
has also increased so that the cost has actually forced most people to finance their vehicles because they
can not afford to pay cash. As demand for vehicle financing increased, so did the the available payback
term. Today well qualified (good credit) buyers can finance most new or late model vehicles for up to 84
months. In the end however, it is not just extended terms or lack of cash that is the most important reason to use credit to purchase a vehicle. The best reason to use credit to purchase a vehicle is actually a basic economic principle. Never use cash to purchase a depreciating asset.
An asset as defined in traditional financial accounting is any item you ‘own’ that has monetary value (it can be sold for cold hard cash). (ALL) vehicles are depreciating assets, there are (NO) exceptions. No matter what you pay for a vehicle today it will probably be worth less tomorrow and certainly worth way less next year. By any meaning of the term “asset” a motorized vehicle is not a good one. In simple economic terms why in the world of sanity and logic would anyone pay hard cash for an asset guaranteed to be worth less no matter what, every day it is owned. This simple principle of economic reality is the basis of the most important reason to use credit (Other Peoples Money-OPM) to purchase a vehicle.

There is no easy or free way to check your credit score (called “Beacon Score” by most people in the car
business). However, the expense in time and/or money to get your three credit reports is far less than the
cost to you for not knowing. The three main credit reporting companies are TransUnion, Equifax, and
Experian. Links to their websites are below.
www.transunion.com

www.equifax.com

www.experian.com
Each of these companies are obligated by Federal law to provide you (by request only) with a free copy of your credit report each year. To get these copies you must apply for individual reports from each company each year. Sounds easy and yet each of them will give you some hoops to jump through in order to obtain your credit report from them. Their efforts to make it difficult for you to get your free credit report from them, has given rise to many companies offering to track your credit reports for small monthly fee. To get you to sign up for their services these companies offer you a free credit report from each of the three reporting companies. It seems the Federal government has authorized only one third party company to
obtain all three free reports for you that are are allowed each year and to supply them to you FREE! Below is the Federal Trade Commission website link.
http://www.ftc.gov/bcp/conline/edcams/freereports/

In spite of any difficulties and/or expense involved you must obtain these three credit reports in order to evaluate your own credit. Nearly every dealership (new or used) will want to obtain a credit report
(possibly more than one) in order to determin your credit worthiness, and to be able to better structure your/their loan application(s) to get maximum loan amount and the most months of repayment term. Your
credit report(s) include(s) significant information concerning your credit history, loan repayment statistics (reported by lenders), collections, judgements, legal actions, and of course your credit (Beacon) score. The credit (Beacon) score will be the first thing any that will be looked at by prospective lenders and it is what
you must know and strive to constantly improve. Credit (Beacon) scores are expressed in a number from 400-900 with the higher numbers meaning the better score.

Your credit score will primarily be used (by lenders/dealers) to determine your ability to obtain financing, and the interest rate you may qualify for on a loan. Many items included on your credit report contribute to your overall score. (For more detail see “How to repair my credit score.’) Scores of under 499 are considered “bad risk” with little chance of repayment and consumers with these scores seldom get loans from traditional lenders while always paying the maximum interest allowed by law on any loan they do get. Scores from 750-900 (considered “low risk”) can almost always get maximum term and lowest interest on any traditional vehicle loan. Consumer credit scores of 500-625 are usually classified as “poor risk” with final determination depending on wheather their score has been improving or declining in the past 12 months. Beacon scores of 626-749 are rated as “moderate to good risk,” again with final determination depending on wheather their score has been improving or declining in the past 12 months.
In spite of these basic classifications each loan application is evaluated further by other specific details on your credit report and application. (For more detail see “How to repair my credit score.”)

This would seem like a superfluous or rhetorical question. It is not! Credit as defined by common usage
today means a person’s (or corporation’s) ability to borrow money. Even if you never need credit to purchase anything, your credit will be evaluated today by prosective employers, associations you may want to join, and by various government agencies. All of these evaluations will be made concerning your credit with or without your consent or knowledge.
Only when you apply for a loan can a lender (and/or seller) actually or legally obtain your credit report and only then with your written permission. Remember anytime you sign any form in a retail business that is legally an agent for a lender, you may be giving written permission to obtain your credit report. Read everything you sign carefully! Just for you own information, even a friend lending you money can obtain your credit report if he has your name, social security number and permission (signature).