Understanding Credit

                Understanding how credit works can be confusing. Unfortunately, schools don’t often teach us the importance of credit and how it can affect our lives. These lessons are usually learned by trial and error, often negatively impacting our credit rating. Your credit report follows you everywhere you go. The more you know about it, the more power you have to make decisions to help you get through life with less resistance. 

     
           So what is a credit report? Basically, it’s a measurement of how dependable and responsible you are with your money. Any time you get a credit card, loan, line of credit, mortgage, etc., you are establishing your credit score. Even having accounts with utility companies like Gas and Hydro, or cell phone contracts, are reflected on your credit report. In Canada there are 2 credit Bureaus that keep track of your credit reports; they are Equifax and Trans Union. You are given a score on your credit report based on how you use the credit available to you. Credit scores usually range from 300-900. How you handle your payments will determine whether you have a good credit score or a bad one. There are several things that are taken into consideration when looking at your credit report.  If you always pay the entire monthly balance in full and on time you are earning a higher credit score. The amount of credit available to you verses the amounts you owe is taken into account. For example, if you have a credit card with a limit of $5000.00 and you have only used $2000.00 that has a positive impact on your score. Alternately, if you are maxed out on your card it can be negative. So, ideally you want to use a small amount of the credit available to you, andalways pay on time and in full, to have a higher credit score.             

Now, attached to borrowing credit is interest. Interest is another subject that can cause some confusion. When you borrow money a percentage is added to your total, this is basically a fee for borrowing. These percentage rates can vary based on different factors. Your credit score determines how much interest you will be charged; you will be rewarded for being dependable and responsible with a lower interest rate. When you first apply for credit you generally have to pay higher interest because you are higher risk to the lender. Once you can prove yourself to be reliable your interest rates can be reduced.  

It is not uncommon to learn about credit the wrong way, which means your credit isn’t in the best shape. Different situations in life can put you in difficult credit shape. Sometimes we have either made wrong choices when it comes to using our credit, or we have had certain life circumstances that have made our credit look bad. Going through a divorce is one of these situations that can ruin your credit rating. Also, just starting out in your adult life means you have no credit, either you have a low income job or you are a student. In these situations your goal should be to improve your credit score as much as you can if you want to have access to lower interest rates in the future. Improving your credit score before you apply for a loan could have a significant impact on your monthly payments as well as your ability to qualify for a loan.

The first thing you will want to do is find out what your credit score is. You can do this by contacting the credit bureaus in writing and requesting a copy of your credit reports. In Canada it is free to do this, Equifax and Trans Union both allow unlimited requests. You can also pay a small fee to have unlimited access on line if you want to have the ability to watch closely. Go over the report carefully; you can dispute any incorrect or outdated information in writing with each agency. Now that you have a realistic idea of what your credit looks like you can begin the process of building it. Be patient and persistent, it can take up to a year to improve your credit score. Be wary of companies that say they can repair your credit for a fee, credit repair takes time. Try and pay off the balance owing on any credit cards or loans, be sure to read the fine print and make sure there are no penalties attached to paying these off early. If you are not able to pay things off completely then pay as much as you can to avoid interest charges. Be diligent in making payments on time, this will build your score.

Our dealership provides long term finance plans to help you improve your credit.  These plans are designed to help those who are just building their credit, like students and people with low income, as well as those who are rebuilding credit after divorce or poor financial decisions. We have stepping stone financing, to help gradually bring your credit score up and your interest rates down. For those of you who have good credit scores our Banking Office has great financing with interest rates that can be lower than what your bank can offer. These finance options are specialized for auto loans, that is why we have access to them.  People are often afraid of options available at car dealerships, thinking they will automatically be subjected to unfair rates. We are here to tell you that is not always the truth. Our dealership wants to help you get the best rate available to you.  Because of this fear often people will choose to go through their bank for a loan or use a line of credit to purchase a vehicle. These options are not always best. Do your homework and compare what interest you will be paying from the bank verses what we can offer. Realize that your Line Of Credit is not intended for such purchases, these are put in place to protect you from unforeseen events. You really want to keep your line of credit open for other purposes.            

Whether you have no credit, bad credit, or good credit your credit rating is established by you.  You have the power to maintain or improve your credit score. Your main goal should be to show lenders that you are not a risky borrower. Do this by being responsible with your payments. It will be you who benefits in the long run. It may seem like a challenge but if you are consistent and determined you can have a healthy credit score.

-Muriel Rolufs

How to #3 - How To Check A Used Vehicle Before Buying It

              Purchasing from a reputable dealership is a really wise decision when it comes to buying a used vehicle. A good dealership will be looking out for your best interest, they should be ensuring the vehicle has been inspected and in good condition. With this being said it is important not to put all of the responsibility in the hands of the dealership, after all you are the only one who knows your standards.  You don’t want to take a vehicle home to find out a few days later that it is not up to your expectations.  Often, if there is something that you notice at the dealership you can bring it to their attention and they will be able to address your concerns on the spot. You have to have realistic expectations, remember you are buying used and depending on the age of vehicle there will be some imperfections. Also, the asking price usually reflects these blemishes. Knowing at the time of purchase is easier to live with rather than finding out later. Make sure you take the time to thoroughly inspect your purchase before you buy. 

                Start with the exterior. Walk around the vehicle and have a good look at the condition of the paint; take note of any dents, rust, paint chips, or scratches. Take a look at the windshield; see if it has any cracks or chips. The tires should be looked over as well; look at the tire tread, make sure it is not too worn. Also, look at the side walls of the tires, there shouldn’t be any cracks or bulges. A good sales person will have nothing to hide and will often point out these flaws.

                Now go ahead and pop the hood. I know not everyone knows their way around a motor, but don’t worry you don’t have to be a mechanic to have a look under the hood. What you are looking for here is the basic condition of the motor. You want to look at the hoses and make sure they are not cracked or split. Look at the interior of the hood and motor frame; see if there are any dents or rust.  The motor should be relatively clean. Check for any leaks, look under the vehicle to ensure nothing has been dripping on the ground. You could go even further to check the fluids: Oil, transmission fluid, etc. Again remember that you don’t have to be a professional, just make sure the fluids are not below level and that nothing looks out of sorts. If you are not sure, ask.

                If you feel that you have given the motor and exterior a good once over then turn your attention to the interior. Have a look at the upholstery and carpet. The seals around the doors should get a quick inspection too, make sure they aren’t sagging or cracked. Turn the vehicle on and test out the radio, heater, A/C, power windows, locks, and any other electrical features. The trunk should also be checked out. See if there is a spare tire on board, is there a jack? 

                You’ve looked the vehicle over inside and out, now it’s time for a test drive. This is a very important step in your overall check. This is when you really get a feel for how it handles. Make sure you have enough time to take it for a good spin. It’s best if you have an opportunity to try driving around town where you can do lots of starting and stopping, as well as trying it out on the highway. You are going to be using all of your senses here to make sure things are up to par- except your sense of taste, that’s not necessary. Turn down the radio, you really want to pay attention to any noises you hear; rattling, squeaking, rumbling, these could be an indication of something that needs attention.  Take note of any vibrations, if you feel any shaking that is also a sign that there could be a problem. Smells are also important to pay attention to, if it smells like something is burning or you smell anything unusual make sure to bring it up to your sales person. If you do see, hear, or smell anything unusual pay close attention to what you were doing when you noticed a problem, were you turning or stopping? What speed were you going? Knowing this will help the dealership to identify the source. Some people like to take the vehicle to a shop for an additional inspection (we already have a 50 point safety inspection done on every vehicle we sell.)

                Used car dealerships have a bad rap, rest assured we are not all the same. A good dealership will take care of their customers throughout the buying process and well into the future. They will also take good care of their inventory, making sure maintenance on their vehicles is a priority. We do our best to have a great product to suit your needs, but ultimately you should make sure are taking measures into your own hands to ensure your satisfaction. If you are dealing with a reputable dealership then your experience should be stress free, you shouldn't have to go over everything with a fine tooth comb. Just know what is important to you. This will help you to feel confident with your purchase and help you to get years of enjoyment from your vehicle.   

-Muriel Rolufs