An Important Number
Your credit score is a three-digit number credit bureaus develop by evaluating the information on your credit file. Along with your credit history, it has an impact on whether or not you are approved for a mortgage, car loan or credit card and what interest rate you'll pay.
Lending Industry Standard
A borrower's credit score has been proven to be the best predictor of the borrower's repayment performance. The three major credit bureaus generally use a formula developed by the Fair Isaac Corporation (FICO) to analyze the credit information they have on file for you. Your FICO score is what most lenders use to determine the interest rate you'll be offered. Borrowers with high credit scores are usually offered lower interest rates, while those with lower scores may still get credit but will have a higher interest rate.
Figuring Your Score
The three major credit reporting agencies may each assign you a different score, based on the specific information each has on file. But they follow a similar method to come up with that number, which range from 300 to 850. The median score in the United States is 723. Knowing your FICO score and understanding how it is calculated can help you improve your credit profile and thus affect what you pay for financing.
Today's interest rates are still low, so if you feel your rate is too high on your current auto, boat, or RV please give us a call at 1to see if Dave Smith Motors Finance Department can help you save money. Contact one of our finance experts today for low rates and refinancing options on automobiles, boats, and RV's.
As the cost of vehicles continues to escalate, we here at Dave Smith Motors have found a way to give you the monthly payment you desire and still drive the new vehicle of your choice. Lease it!
Advantages to Leasing
- Lower Monthly Payments and Low Down Payment. Payments on a lease are less expensive than financing because you are only paying for the depreciation, which is the difference between the price of the vehicle and the residual value.
- Upside DownNever have to worry about being upside down where the value of the vehicle is less than the amount owed.
- Always have a paymentFor most people, a car payment is like a house payment. You will always have one so why not be driving a new vehicle of your choice every 3 years
- Asset senseYou should buy items that appreciate and lease items that depreciate. For example, most people would not be too excited about buying stock for $30,000 if they knew that it would only be worth $15,000 in 4 years.
- Low RiskA bank or lease company is assuming the total risk of what the vehicle will be worth in the future
- FlexibilityYou do not give up the option of owning the vehicle, you just postpone it. This gives you time to make sure this is the vehicle for you. This makes great sense with advances in technology that have the potential to make your vehicle outdated
- High Mileage Drivers can benefit by applying for extra miles up front at a reduced price. The auto industry deducts 23 - 30 cents per mile over your mileage limit when trading in a vehicle
- Win! Win! In many instances, the residual value is comfortably high resulting in lower monthly payments. At the end of the lease, the lease company absorbs the loss, not you
- WarrantyThe short-term lease leaves you covered under your factory warranty, allowing you to be worry-free about unexpected repair bills
- Get a nicer vehicleHigh residuals allow you to lease a $5,000 - $10,000 more expensive vehicle for about the same payment as financing
- Tax Savings In states with sales tax, you only pay tax on your monthly payment, not on the whole vehicle. And in some cases, the entire lease payment may be tax deductible. Consult your accountant for more information
Your Options at the end of your lease
- Return it to the bank and pay only a small disposition fee
- Sell the vehicle and keep any amount over the residual
- Trade it in on a new vehicle
- Buy the vehicle for the residual amount
- Cap Cost the purchase price of the vehicle plus the acquisition fee
- Acquisition Fee a fee charged by the lender for doing the lease
- Cap Cost Reductions any trade equity, cash or rebates used as a down payment to reduce the cost of the vehicle
Residual a predetermined estimate of the market value of a vehicle at the end of the lease term