Tuesday, September 17, 2013

Credit Scores - FICO 101

The following information is shared by Eddie Johansson in his FICO 101 Seminar provided by Independent Bankers Association of Texas.

FICO Scores:  The Only Ones That Count

Credit scores drive many things in our current economy.  Not only affecting loan approvals, they may also affect rates you pay on insurance, credit cards and the issuance of new credit of any kind.

Pay attention to your FICO scores; avoid FAKO scores.  Only Fair Isaac Corporation scores are accepted by lenders to qualify for loans.  Most online scores are what Eddie calls FAKO.  They are not FICO scores.  You will find FAKO scores at FreeCreditReport.com, Experian's Credit Plus score, Trans Union's TrueCreditScore and many others.  If you don't see FICO next to the score, it is a FAKO.  MyFICO.com is the only place to get FICO scores online.

What your FICO score means:

 
 


Small Mistakes Cost You Big Points

 
One 30-day late payment will lower a 680 credit score 40-60 points.  Why so many points?  FICO scoring is a future risk assessment, so it assumes that there is a high likelihood that the late payment was caused by a real cash shortfall.  FICO is anticipating that the consumer is essentially broke and this late payment is the first sign of future defaults or possible bankruptcy.
 

Time Heals; Recency Kills

 
Bad events lose their punch over time.  The "recency" aspect of a derogatory event is the most score influencing.  Recency is in quotes because more creditors, and most collection companies, report incorrect recency data to the credit bureaus.  (Some errors can be corrected by bureau disputes.)  The error creditors always seem to make is to report a bad event as more recent than it actually was.  This lowers your score and makes you appear less credit worthy than you really are.  Scores will recover as time passes if there are no new bad events.
 

Revolving Accounts Matter the Most

 
Revolving accounts, such as credit cards, are by far the most score influencing.  Because installment and revolving accounts were created for different reasons, they have a significantly different influence on scores.  Installment accounts were designed for long term financing.  Revolving accounts were designed for short term, 30-day to 90-day debts.  FICO is weighted toward revolving debt which it regards as a much better indicator of credit worthiness.  Think about what a teenager usually does with his or her first credit card and you have an idea of FICO's thinking here.  You will most notice this difference when you pay down a debt.  Paying off an installment account will have little, if any, effect on scores: a 1-4 point increase at most.  Paying down credit cards to 5% of the limit or less provides a significant increase in scores.
 

Dollar Amounts Don't Count

 
It is not the dollar amount of credit card balances that influence scores, but rather the ratio of the balance to the limit.  FICO scoring looks at credit cards (revolving accounts) solely as a percentage rate of the balance to the limit.  The higher this percentage, the lower the scores.  Because FICO is designed to assess future risk, it has to assume that every dollar it sees on a credit card balance is a dollar not in the bank.  Put another way:  FICO assumes if the money was in the bank the consumer would pay down the credit card to avoid interest costs.
 

Avoid New Acounts Before Major Purchases

 
New credit accounts lower scores.  The more new accounts a consumer opens in a short time span, the riskier it is to give them one more account.  This effect is separate from, and in addition to, the score decreases from the credit inquiries to open the accounts.  Therefore the rule is:  Never open a new account within eight months of a major purchase.
 
 
 


Monday, May 20, 2013

Online Banking, Data Security and You

Safe Online Banking - Partnering for Online Security


Online banking has grown rapidly into a major new way to bank.  Some surveys show that more people prefer to bank online than in the traditional ways.  This phenomenal growth has been accompanied by increases in the safety and security measures undertaken by banks and their customers.  But cyber-criminals are always looking for new ways to electronically break into the bank and steal your money.

Safe online banking depends on continuing and strengthening this partnership for safe online banking:

BANKS INVEST SUBSTANTIALLY IN SECURITY


Lawmakers, regulators and the banking industry have forged substantive standards for safeguarding customers' personal information.

Uniform examination procedures are in place to monitor and enforce these standards, and bank examiners regularly go on-site to assess how bank security measures are being implemented, understanding that each bank has a different menu of products and services, and therefore differing security requirements.  Some of the areas they look at include:

  • Access controls ensuring customer information can be accessed only by authorized persons, including use of multi-factor authentication when warranted.
  • Physical restrictions at computer facilities that permit access to authorized persons only.
  • Data encryption of electronically transmitted and stored customer information.
  • Modification procedures to ensure that changes are consistent with the approved security program.
  • Dual control procedures, segregation of duties, and employee background checks.
  • Monitoring procedures to detect actual and attempted intrusions into customer information.
  • Response programs specifying actions to be taken by specific individuals when the institution suspects unauthorized access.
  • Environmental hazard protections against physical damage or technology failures.

BANKS PARTNER WITH YOU, THE CUSTOMER


Austin Bank has security measures to protect your account information, but they can't be effective without your help and cooperation.  Many account hijacking attempts come as a result of hacking into individual user accounts, and from there electronically breaking into the bank using your information and security codes.

Some common sense and easily implemented precautions can help you safeguard your personal information:

  • Strong Passwords - Experts advise a combination of letters and numbers, and advise against using easily guessed passwords such as birthdays or home addresses.
  • Anti-Virus Protection - Make sure the anti-virus software on your computer is current and scans your email as it is received.
  • Email Safety - Email is generally not encrypted so be wary of sending any sensitive information such as account numbers or other personal information in this way.
  • Sign Off and Log Out - Always log off by following the Bank's secured area exit procedures.
  • Don't Get Phished - Crooks are always trying to get your personal information and they employ some ingenious methods.  Don't respond to any unusual email requests for personal information - when you opened your bank accounts you already gave it.  When in doubt, call the Customer Care Center at 1-800-644-9275 or email customercare@austinbank.com.
  • Monitor Your Accounts - When you check your accounts regularly you can let us know immediately if you encounter anything that does not seem right.

Helpful Hint:  Studies show that those who monitor their accounts online often detect fraud earlier than those who rely solely on paper statements.

FREE CREDIT REPORTS YOUR BEST TOOL

When it comes to guarding against cyber-fraud, one of the most important tools at your disposal is your credit report.  It details all of your credit transaction accounts and will be the first place that unusual charges or entirely new accounts will appear.  And, you can monitor your report for FREE.

Since Federal law permits consumers to obtain a free report annually from each of the three major credit reporting agencies, cyber-security experts advise that you get a free report from a different agency every four months.  Doing so will allow you to monitor your personal online security all year long.

TO ORDER YOUR FREE CREDIT REPORT,
GO TO THE ONLY AUTHORIZED SOURCE:
1-877-322-8228

RESOURCES

Internet Crime Complaint Center:  www.ic3.gov
Consumer Fraud (Department of Justice homepage):  www.usdoj.com
Federal Trade Commission (FTC) Consumer Response Center:  www.ftc.gov
Consumer Guides and Protection:  www.usa.gov
Financial Fraud Enforcement Task Force:  www.stopfraud.gov
On Guard Online:  www.onguardonline.gov


Content provided by the Financial Education Corporation.

Thursday, May 2, 2013

A Banking Relationship test for your Small Business

ABA Offers Tips for Small Business Owners: Assessing Your Banking Relationship

Seven key questions small business owners should ask themselves about their bank.


 
​Now that the 2012 tax season is in the rear-view mirror, it’s a good time for small business owners to reassess their company’s financial health and their relationship with their bank. The American Bankers Association offers the following tips to help small business owners enhance their current banking relationship or choose the best bank for their needs.
 
Many small business owners have been wondering what it takes these days to get a bank loan. One way to influence your bank’s decision is to establish a personal relationship with your banker that shows him or her just how valuable your business is.

Banks value long-term, profitable business banking relationships. Bankers reward these firms by extending credit with the most favorable interest rates. These businesses and their bankers understand that developing a meaningful relationship is a two-way process—your banker has a role to play and so do you.

So how do you know if you have a meaningful and valued relationship with your bank? To find out, take the following “relationship test.” Respond to the seven statements below with “true” or “false.”
 
  1. My firm has a bank relationship manager assigned to our account and we have contact (by phone or in person) at least once per quarter to update the bank on recent developments at our firm and within our industry.
  2. Our bank relationship manager understands our industry, our position in the industry, our firm’s value proposition, where we are today and where we’d like to be in the future.
  3. We provide our banker with updated financial information (historical and projected balance sheet, income statement, cash flow information to include projection assumptions and commentary on actual performance) regarding our progress toward achieving our goals on a timely basis.
  4. Our senior management team meets annually with our relationship manager and his/her boss to discuss our firm’s financial performance and challenges and to understand the bank’s perception of our performance.
  5. Our relationship manager proactively brings us ideas to help us achieve our goals.
  6. We understand how the current economic crisis has affected our bank and our relationship with the bank (i.e., the availability of credit to our firm and the safety of our deposits).
  7. Our firm makes sure that our banker is aware of all of our business with the bank (e.g., both business and personal) and that it makes money on our total banking relationship. In addition, our firm provides our banker with referrals to other profitable businesses.
 
If you were able to respond “true” to all seven of these statements, you have positioned your firm well with your banker.
 
If you answered “true” to five or six, you still have room for improvement in developing a meaningful dialogue with your banker and benefiting from his or her advice and counsel.
 
If you answered “true” to four or fewer, you have not positioned your firm well with your banker and are putting your firm at a competitive disadvantage in terms of:
  • receiving the funds you need to grow and prosper;
  • obtaining the best rates available for the financial products and services your business needs to operate; and
  • receiving “ideas and advice” to help you achieve your desired business goals.
Your firm should seek a bank that rewards a relationship approach to doing business with them, and a banker who is able to give your firm the financial advice that it needs to survive and thrive in today’s ever changing economy. In return, your firm should reward this bank with your business and loyalty.
 
The American Bankers Association represents banks of all sizes and charters and is the voice for the nation’s $14 trillion banking industry and its two million employees. Learn more at aba.com.
 
# # #
 
To learn more about the banking services offered by Austin Bank for your small business, stop by your local office and speak to a banking officer or click the link below.  We offer a full range of products designed to help you start and grow your business, whatever it may be.
 
 

Community Bankers in East Texas serving the banking needs of businesses of all types -
from ag to oil and everything in between.
 

Friday, April 19, 2013

Summer Travels and Your Debit Card

With summer just around the corner many families are planning to travel.  Whether it’s a day trip or a trip outside the country, we encourage our customers to alert us if they plan to use their debit cards outside of their typical shopping areas.  This can be done by calling the Customer Care Center at 800-644-9275 or speaking to a Customer Service Representative at your local office.
When you inform us of your travel plans, Austin Bank will alert the Fraud Department who can then take this information into consideration when viewing alerts on potentially suspicious behavior.  Customers do need to be aware that by alerting us to their travel plans it does not mean that all transactions will automatically be approved while traveling in a certain area.  The Fraud Department will also take into consideration the amount of purchases, frequency of purchases, the merchant where the card is being used, etc.  Additional care is given to help protect customers who may be travelling yet have their card lost or stolen while there.  Austin Bank will work to protect our customers whether at home or abroad.

Some additional tips and hints to keep in mind while travelling with your debit card:

·         Never travel out of the country with only one form of travel money.  Bring along a credit card, travelers checks or cash in case your debit card is stolen or blocked for suspicious activity.  
·         Compile a list of telephone contact numbers in case you lose your debit card.  (Remember, you can’t dial toll-free or “800” numbers from outside the United States.  Should you need assistance while travelling, call 903-759-3828.)  
·         Clear your wallet of additional credit or debit cards - these will only cause you more headaches if your wallet is lost or out of your control.  Also, it is a good idea to carry only the card you will be using and keep backup cards in a safe location, e.g. in a safe in the hotel where you are staying.  Or, never keep all forms of payment in one place on your person.  For instance, keep one in your wallet, one in another pocket and one in another bag or location.
·         Make copies of your cards (credit and debit), front and back, and leave the copies along with a list of telephone numbers with a family member or trusted friend.  This person can help you make telephone calls quickly if you misplace your card.
·         Call the Bank – again.  It is always wise to call Austin Bank the week before you leave.  Advise them of all of your destinations and tell them when you plan to return.
·         Set up transaction alerts for credit and debit cards. This will allow you to be informed much faster of transactions that occur on your cards and shut down fraudulent activity.  (You can set up alerts for many types of transactions regarding your checking account.  Log in to your online banking account and set up the alerts in the Messages box on the Accounts page.)
·         Check your balance before you leave.  Know the limits on how much you can withdraw.
·         
Save all your receipts and check your statement when you return for any fraudulent charges.

Again, we at Austin Bank want to make sure you have the access you need to your finances, at home or while travelling.  If you need any help with your debit card, please reach us at 800-644-9275, and happy travels.

Wednesday, April 10, 2013

Penny Pinchers - Saving Tips

Penny Pinchers


Today's tip was written by Kelley C. Long, CPA/PFS and member of the National CPA Financial Literacy Commission.

My great-grandma always used to say a penny saved is a penny earned. And she was right! While I don't re-use plastic sandwich baggies like she did, I do practice a few money-saving habits that help me find an extra $50 or so each month to put away towards my financial goals. Here are five of my favorites.

Save your change. When you're paying with cash, make it a habit to pocket the coins instead of paying with correct change. Once a month, take your change to the bank and deposit the contents in your savings account. You'll be surprised how much you can accrue.

Round up. When recording expenses in your checkbook register, (You do keep one, right? If not, you should!) write the correct amount in the debit column, but when you carry it over to subtract from your balance, round it up to the next dollar. Watch your "change" add up!

Match your spending. Most of us have something that we tend to overspend on – it might be a daily latte, new shoes or the latest music. Whatever it is, make a deal with yourself that for every dollar you spend on your indulgence, you'll match it with a deposit to your savings account. That way your hard-to-cut-out treats won't cut into your saving!

Pocket your grocery savings. Most grocery stores list the amount you "saved" on sale items on the bottom of the receipt. Turn this into real savings by taking the dollar amount and putting it into your savings account. Even if it's only a couple dollars, do it, you'll be amazed how easy it is to give your savings a boost.

Be deliberate with "found" money. Last month I changed my cell phone plan and reduced my bill by about $20 per month. Instead of just absorbing that money into my spending, I increased my monthly savings account transfer by $20. Do the same with any extra money you find, like raffle winnings, tax refunds, one percent salary increases, etc.

There are lots of little ways to increase the amount of money you save each month; the key is that instead of saying, "Oh, it's just a couple bucks, so it doesn't matter," remember that the little things add up!

This article courtesy of Feed the Pig. Copyright 2011 American Institute of Certified Public Accountants

Austin Bank has several savings accounts to help you meet your savings goals.  Check out a list of options here, and contact your local office for more details on opening an account today.

Wednesday, April 3, 2013

FRAUD ALERT! Texts, Pop-ups and Downloads

FRAUD ALERT!

Texts, Pop-ups and Downloads


Be on guard against "urgent" requests and unsolicited "deals" on the Internet.

FDIC reports that criminals masquerading as legitimate businesses or government agencies are tricking consumers into divulging valuable personal information over the computer, phone or fax in order to drain bank accounts.  Here are the latest tips from the Federal Deposit Insurance Corp (FDIC) for protecting against new schemes using electronic devices.

THINK TWICE before responding to "urgent" text messages.

A new scam involves a text message sent to cell phones and smartphones warning bank customers that their debit card had been blocked for security reasons.  The message urges users to call a hotline to unblock their card, but instead they reach an automated response system asking for their card number, personal identification number (PIN) and other information.

"Unfortunately, this is enough information for thieves to create counterfeit cards and commit fraud," says Michael Benardo, Chief of the FDIC's Cyber-Fraud and Financial Crimes Section.

Smartphone users are now being targeted by scammers because they almost always have their phone handy and tend to respond to calls and e-mails quickly, so that they may not realize a message is fake until it is too late.  Not only that, but fake web sites are also harder to spot on a small screen.

BE ON GUARD against unexpected pop-up windows on web sites, including your bank's.

If after you're logged onto your bank's web site - or any web site for that matter - you get an unexpected pop-up window asking for your name, account numbers and other personal information, that is likely a sign that a hacker has infected your PC with spyware and is trolling for enough information to commit identity theft and gain access to your bank account.

It's normal for Austin Bank to ask you for your log in ID and password when you first log in and to ask you to answer a 'challenge question' if you want to reset your password or start using a new computer.  But Austin Bank will not ask you - through a pop-up window - to type your name and information such as your date of birth, mother's maiden name, bank account and cell phone numbers.  The bank only needs that type of detailed personal information when the account is initially opened.

BE SUSPICIOUS of unsolicited offers to download games, programs and other "apps."

Those "deals" could contain malicious software directing you to fake web sites or install spyware used to steal information that can lead to theft.  "You should consider using anti-virus software specifically designed for smartphones and other mobile devices," advises David M. Nelson, an FDIC fraud specialist.

YOUR BEST DEFENSES AGAINST HIGH-TECH SCAMS:

  • Be aware that cyber criminals always look for ways to use new technology such as smartphones to try to commit fraud.
  • Stop and think before giving personal information in response to an unsolicited request, especially one marked as urgent, no matter who the source supposedly is.
  • Only communicate with your bank using phone numbers or e-mail addresses you are certain about - such as the customer service number on your bank statement or the back of your card - and add these important numbers to your phone's contact list.  (Contact information for Austin Bank can be found here.)
  • Only install programs you know are from legitimate web sites, such as your Internet service provider, financial institution, wireless phone company or trusted app vendors.

For additional tips on avoiding Internet fraud, visit www.onguardonline.gov.


This information provided by Financial Education Corporation.

Tuesday, March 26, 2013

Free Annual Credit Report


How to Obtain your FREE Annual Credit Report under the FACT (Fair and Accurate Credit Transactions) Act


Information provided by the Federal Trade Commission, the nation’s consumer protection agency.

The official web site www.annualcreditreport.com is the ONLY authorized online source for you to get a free credit report under federal law.  You can get a free report from each of the three national credit reporting companies every twelve months.

Fair Credit Reporting Act requires each of the nationwide consumer reporting companies – Equifax, Experian and TransUnion – to provide you with a free copy of your credit report, at your request, once every twelve months.  There is only one online source authorized to do so:  annualcreditreport.com.

The Federal Trade Commission (FTC) advises consumers who order their free annual credit reports online to be sure to correctly spell annualcreditreport.com, or link to it from the FTC’s web site to avoid being misdirected to other web sites that offer supposedly free reports, but only with the purchase of other products.  Consumers are not required to make a purchase to receive their free annual credit reports.

The FTC has received complaints from consumers who thought they were ordering their free annual credit report online.  Some consumers responded to TV ads, e-mail offers or simply searched online.

“Annualcreditreport.com will NEVER send you an e-mail solicitation for your free annual credit report, or use pop up ads.”

File a Complaint


The FTC wants to hear from you if you paid for what you thought was your free annual credit report.  Go to www.ftc.gov and click “For Consumers” on the menu.

SPAM

The FTC also wants you to forward any unsolicited e-mails you’ve received offering you a free annual credit report.  Send them to spam@uce.gov.

Ordering your FREE Annual Credit Report


The three nationwide consumer credit reporting companies have set up one central web site, toll-free telephone number and mailing address through which you can order your free annual report.    To order, go to annualcreditreport.com, call 877-322-8228, or complete the Annual Credit Report Request Form and mail it to:  Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA  30348-5281.

Do not contact the three credit reporting companies individually.  They are only providing reports through the contacts listed above.

Friday, March 8, 2013

Welcome to the shortest weekend of the year!



Great news, right? Well, some might consider it so.

Most of the United States begins Daylight Saving Time at 2:00 a.m. on the second Sunday in March. This year, that falls on Sunday, March 10. The majority of people will change their clocks on Saturday evening before they go to bed, but you could wait and do it Sunday morning as well.

During DST, clocks are turned forward an hour, effectively moving an hour of daylight from the morning to the evening. Daylight Saving Time (and not Daylight Savings Time with an "s") wasn't just created to confuse our schedules.

History of Daylight Saving Time:


Daylight Saving Time was instituted in the United States during World War I in order to save energy for war production by taking advantage of the later hours of daylight between April and October. During World War II the federal government again required the states to observe the time change. Between the wars and after World War II, states and communities chose whether or not to observe Daylight Saving Time. In 1966, Congress passed the Uniform Time Act, which standardized the length of Daylight Saving Time.

Interesting Facts:


• The first American to advocate for daylight saving was Benjamin Franklin. He realized in 1784 that many people burned candles at night yet slept past dawn in the summer, wasting early-morning sunlight.

• During the eight-month period of Daylight Saving Time, the names of time in each of the time zones in the U.S. change as well. Eastern Standard Time (EST) becomes Eastern Daylight Time, Central Standard Time (CST) becomes Central Daylight Time (CDT), Mountain Standard Time (MST) becomes Mountain Daylight Time (MDT), Pacific Standard Time becomes Pacific Daylight Time (PDT), and so forth.

• Daylight Saving Time is four weeks longer since 2007 due to the passage of the Energy Policy Act in 2005. The Act extended Daylight Saving Time by four weeks from the second Sunday of March to the first Sunday of November, with the hope that it would save 10,000 barrels of oil each day through reduced use of power by businesses during daylight hours. Unfortunately, it is exceedingly difficult to determine energy savings from Daylight Saving Time and based on a variety of factors, it is possible that little or no energy is saved by Daylight Saving Time.

• Arizona (except some Indian Reservations), Hawaii, Puerto Rico, the U.S. Virgin Islands, and American Samoa have chosen not to observe Daylight Saving Time. This choice does make sense for the areas closer to the equator because the days are more consistent in length throughout the year.

• Kyrgyzstan and Iceland are the only countries that observe year-round Daylight Saving Time.

• In 2005, Kazakhstan abolished daylight saving time, citing negative health effects. The country's government reportedly calculated that 51.6 percent of Kazakhs responded badly to the time change.

• People are safer drivers during daylight hours, and researchers have found that DST reduces lethal car crashes and pedestrian strikes. In fact, a study concluded that observing DST year-round would annually prevent about 195 deaths of motor vehicle occupants and about 171 pedestrian fatalities.

• The effect of DST on energy use has changed over time and varies from place to place. Experts even disagree on whether DST still saves the nation energy. But so many people like to "spring forward" that it might be hard for officials to end the tradition, even if they determined it's wasteful.

What about you? Are you excited about the time change and the extended daylight in the evening hours, or would you prefer things stay as they are? We’d love to hear your comments.


** And, take advantage of this time of year (and the change in the fall) to change the batteries in your smoke detectors. **

Monday, February 25, 2013

America Saves Week

America Saves Week


America Saves Week February 25 – March 2, 2013 is chance for individuals to assess their own saving status and take financial action. Studies reveal that having a savings plan with specific goals can have beneficial financial effects, even for lower-income families.


Here are 5 easy ways to get involved in America Saves Week:

1. Take the America Saves Pledge

Those with a savings plan are twice as likely to save for emergencies and retirement than those without a plan. Join over 310,000 people who have already committed to save. Pledge or re-pledge today!

2. Share Your Savings Goal

People save more successfully when they have a goal in mind. That’s why they’ve created posters so you can put your savings goal into perspective and share it.

3. Assess Your Savings

Find out if you are saving in all the right places with this 12 step savings assessment.

4. Test Your Savings Knowledge

Take this savings quiz to reveal how much you understand about the realities of savings in America.

5. Share Savings Tips and Advice with Family and Friends

On Twitter and Facebook? Share what you've learned about saving through social media posts with your friends and followers to encourage them to save.

America Saves Week is coordinated by America Saves and the American Savings Education Council. Started in 2007, the Week is an annual opportunity for organizations to promote good savings behavior and a chance for individuals to assess their own saving status.   Once you make the decision to start (or continuing) saving, let Austin Bank help.  We have a variety of tools to help you reach your savings goals.  Programs are even available for Young Savers.  Take a look on our web site or stop by one of our many convenient locations in East Texas to learn more.  And, good luck in reaching your savings goals.   Tips and links furnished by Katie Bryan, America Saves Communications Manager.

Monday, February 11, 2013

Advice for Buying a New Car


Advice for Buying a New Car



2013 has been projected as a great year for new and used car sales. Interest rates remain low on auto loans and this is a win for all involved in the process – manufacturers, dealerships and customers.

If a new car is in your plans for 2013, here are some tips for making a smart purchase:

Financing:

If you will be seeking a loan to purchase your new vehicle, set up your loan in advance. Stop by your nearest Austin Bank and prequalify for a loan. This will tell you how much car you can afford and what type of monthly payment you will need to budget. Take note of the annual percentage rate (APR) on the loan; and try to keep the length of the loan as short as possible while maintaining an affordable monthly payment. These two factors will make big differences in the amount of interest you pay over the life of the loan.

By taking this step first, negotiations at the dealership will be simpler and hopefully less time consuming. And, you will be aware of actual rates you qualify for. When arranging a loan, dealers often make extra money by “bumping” your interest rate up over the rate for which you actually qualify. Being prepared can help you save money and be a smarter purchaser.

Research:

Before stepping foot on a dealership lot to make a purchase, have an idea of what vehicle you want. With the vast amount of information available on line these days, you should be able to narrow down your search significantly. Visit dealerships when they are closed to shop without pressure, and test drive vehicles only for informational purposes – don’t test drive and buy the same day.

Once you are down to two or three vehicles, check out price, reliability and cost on each. Use web sites such as www.consumerreports.org to find their list of recommended new car buys. Additional web sites like www.edmunds.com, www.kbb.com (Kelly Blue Book), and www.nada.com offer great tools that will help you determine the actual value of the vehicles you are considering.

Knowing this information will aid you in the price negotiations at the dealership. You may also want to try to determine the dealer’s cost for the vehicle. This information will take a little more effort to determine, but can help you get the best price for your new vehicle.

Get Quotes:

One of the most effective ways to get the best price for your new vehicle is to get the dealers to compete for your business. To do this, gather quotes from several dealerships in your area or in neighboring towns. You can also request price quotes through car-buying web sites.

Be sure that you tell them the exact model, trim level and options that you desire, and that you want an out-the-door price. Don’t discuss trade-ins or financing terms at this point.

If you want to take it a step further, see if any of the dealer’s would be willing to “match the price” of their competition. This can be helpful if you prefer one dealership over another.

Visit the dealership:

The trip to the dealership can be the most stressful part of this process. Being prepared with your research, quotes and prequalification will help to reduce that stress. Be sure to watch the details at the dealership. Small things will make a big difference in what you ultimately pay for that new car.

Dos and Don’ts to remember –

Don’t negotiate around monthly payments. Doing so gives a salesperson too much room to work things to their advantage, especially if you have a trade-in or are financing through the dealer. Instead, negotiate a final new-car price before discussing your trade or financing terms.

Don’t buy unnecessary extras. Items that fall into this category may include corrosion protection, pain sealant, fabric protection, or extended warranties. Many of these services are available at a later time, and can usually be found for less money. Don’t let the salesman slip them in on you.

Do bring a calculator. Check your own calculations and verify the salesman’s numbers. Know how to calculate your monthly payment for the terms you agree on and make sure no little extras have been added in.

Don’t drive the car home before the paperwork is complete. Doing so can result in the dealer calling the buyer back claiming the financing fell through and requiring him/her to sign new papers under different terms.

Do be prepared to walk out. Sometimes your willingness to leave is your most powerful negotiating tool and the best way to protect yourself. If the salesperson tries to raise a price you negotiated or doesn’t treat you fairly, be willing to walk away.

Are you in the market for a new vehicle? Our lenders have the tools to get you behind the wheel. Stop by today to take advantage of our special low rates, quick decisions and personalized service.
(Special rates are available until March 31, 2013.)

Information included above gathered from Consumers Union of U.S., Inc. and www.clarkhoward.com.