The dealer will usually want the 20 percent (or more) in order to make moreprofit and cover the cost of the bank fee, especially if they are in a state
that won’t allow them to tell the buyer about it. The dealer can also sell acar in rougher condition or with a less-than-stellar CARFAX history for a
premium price to a sub-subprime customer. While the average used carsold at a dealer in 2010 had just about $1,500 in profit, a spi-fi deal ends up (^)
making the dealer $3,000 to $6,000 if they structure it correctly. This is whyit is absolutely critical to know your credit situation before shopping, and do (^)
anything you can to correct it.
Remember that since there are no prepayment penalties on an auto loan,you can refinance it once you’ve made six to 12 payments on time—even
through the same lender. Don’t go two or three years at 21 percent interestwhen you could have refinanced it down to eight or 12 percent.
A final note on what to do if you have really poor credit: Avoid “creditcounseling” debt consolidation-type agencies. These are different from the (^)
companies that attempt to fix your bad credit trade lines, like Law. What I’m talking about are companies that will negotiate on yourLexington
behalf with lenders that you’re far behind with, often as an alternative tobankruptcy.
Regardless of their legitimacy as companies, the one thing debtconsolidation companies inevitably do is prevent you from getting a car (^)
loan—of one will extend you car credit, usually for several years. Ironically, you any type. Once you’ve signed with one of these organizations, no
could declare bankruptcy and often get at least some lender to extend youcar credit right after the bankruptcy is discharged in court.
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