Tuesday, October 2, 2007

The power of manufacturer rebates

The power of manufacturer rebates

by Stephen Snyder

A lot of new car manufacturers offer huge rebates to move new cars out the door. There's a big incentive for a dealer to sell a new car.

You need to locate the highest rebate offer you can find and work toward trading-in your car to eliminate any upside down situation.

Before you go to a new car dealer, go to www.edmunds.com and look up the rebate and interest rate on every new car and truck a manufacturer offers. This way, if the car salesman isn't being fair with you (as far as rebates and interest rates are concerned) you'll know.

Just go to www.edmunds.com and click on "New Cars" and then on "Incentives & Rebates" and you'll get all the information you need.

Some car manufacturers offer
rebates up to $6,000

It's not a good situation to be upside down on a high-interest car loan that you need to refinance. However, you can get around it by purchasing a new car with a large rebate. You just use the rebate to offset the amount you owe on your old car.

And if you find a car with a higher rebate (highly recommended), you're in even better shape. If the rebate is high enough, it can eliminate your negative equity and you can use any remaining amount as part—or maybe even all—of your down payment.

So, if you're $6,000 or less upside down, you can still come out smelling like a rose if you play your cards right.

Ask the car salesman this magic question...

In addition, don't be afraid to ask the car salesman this important question: "What car or truck on your lot do you need to sell immediately?"

If you're in a negative equity situation (meaning you owe more than the car or truck is worth) you need every advantage you can get your hands on. Ask the auto dealer to sell you the oldest car in their inventory.

Car dealers are willing to take a loss on vehicles they're having a tough time selling because it costs them more to keep these cars on the lot compared to selling them right away at a slight loss. This could mean another $500 to $3,000 discount for you!

You still need a high enough score to qualify

Just like every other major purchase you make on credit, you need to meet a minimum FICO score requirement in order to qualify for a loan from the lender...especially if the lender is a bank or credit union.

For instance, on new cars one manufacturer requires a FICO score of:

680 and above to get a 125% loan

650 to 679 to get a 115% loan

620 to 649 to get a 110% loan

And a FICO score below 620 gets you only a 100% loan
Any loan over 100% will go toward paying off what you owe on the car you're trading in.

Bottom line: the higher your FICO credit scores are—the more options you'll have and better terms you'll receive. That's why we're always preaching to increase your credit scores.