www.seoplot.com

The Problem

I was driving home from the store the other night when I noticed a license plate that made me laugh to myself and then I proceeded to feel sorry for the poor sap driving. The plate read "0 DOWN". It was a white, shiny, new Ford Explorer (probably an 06'). Here's what really got me about the caption: Not only did this consumer purchase a brand new vehicle with no cash down, but he was proud of it. DUMB! Commercial advertisements and society as a whole embeds the "purchase Now, Pay Later" method into our heads and it works so well that around 90% of all consumers who purchase new vehicles do not put $5 down on the vehicle before signing the papers. The sad fact is, is that the average new automobile loses $3,000 as soon as it leaves the lot. Technically, you have gone into debt for something that loses value before you even use it. As if this wasn't depressing enough, the less cash you put down on a vehicle and the worse off your credit is, the more you pay for the vehicle. If this isn't one big sand trap I don't know what is!

The Role of Your Credit Report

Your online credit report is affected 2 ways when you purchase a new vehicle with no cash down. First let's look at the role it plays after you decide you NEED that shiny new sports vehicle. The mass majority of consumers are thinking of one thing when they sit in the 'sales chair' to go through the paperwork: driving the vehicle home (man this is bringing back some bad, bad memories). In order to do this you will need to finance the vehicle which requires pulling up your credit history and your credit report. This can easily be done online right in the sales office while you look around to make sure no one else tries to sneak off with your new toy. The worse off your credit report is, the higher interest rate you will pay. (This is fine though as long as you can still afford to purchase food every other week and pay a few bills here and there.)
The other role that your credit report plays in this game is the after-effect. The average new vehicle purchaser's vehicle payment is 25-30% of their total income. This creates a nice, big road block on your credit report in itself for when you are ready to make another large purchase. Not to mention when you fall behind on even one payment and your credit file takes a hard blow. Try to keep these factors in mind next time the kid in you tries to make a financial decision.

The Solution

Well you're not going to like the best solution but here it is anyway: PAY FOR THE vehicle IN FULL! If you saved the vehicle payment every month in a good cash market account; not only would you save time and cash, but when you walked into the sales office with piles of hundred dollar bills you would get quite a deal! Okay, so you're more likely to win the super lotto than do that right?
Well here are a few ideas. As long as you practice a few you might get ahead of this nasty game a little bit or at least protect your online credit report. First, consider getting a 2 or 3 year old vehicle. You can still get a shiny one and the previous owner will have taken the major depreciation of the vehicle passing the savings directly to you. Second, if you can, try waiting and searching to find the best deal possible. Trust me, there is more than 1 of those vehicles in the market. Third, put something down. Anything! For starters you could put down 10 to 15%. This will lower your monthly payment, lower your interest rate and maybe even cut your payoff time down. Lastly, get a bargain. Don't settle for the asking price by any means. Be patient and keep control of your focus. One definition of maturity is learning to delay pleasure.