Finance Questions

Archive for April, 2007

Question: My Credit was Damaged for last two years but I raised my Credit Score to 725?

I leased a car in 2005 and because of the economic situation, I had fear that I could not get another one because my credit score took some hits. Recently GM ran commercials called “Custom Fit Financing”. I called and they said there are many incentives for dealers to use to help get people out of leased vehicles early, help them buy a new vehicle now, help them purchase with no money down and a whole line of things. Has anybody used or heard of this new way of financing? I know it has a lot to do with the economy.

Answer: If I understand what you are saying … yes you would qualify for a loan if you have a job record to go with your score of 725 that is good to excellent credit… don’t be afraid to haggle with them over your intrest rate … just say no … I want a lower rate, that won’t do for me… be strong take your Dad or some adult man with you car dealships are very very bad at trying to give women and young people the worst deals and adding on extra things …

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What is the kiddie tax?

A child who is a dependent of their parents will pay taxes at the child tax rate if they only have unearned income between $850 and $1,700 (for 2006).
If a child under age 14 has more than $1,700 (2006) in unearned income that income may be taxed at the parent’s marginal tax rate instead of the child’s tax rate. This is known as the kiddie tax. This prevents parents from reducing the tax on investment income by transferring assets to their children.
The “kiddie tax” does not apply to:

• A child 14 or over at the end of the year.
• A child under 14 who has unearned income of $1,700 (for 2006) or less.
• A child under 14 if neither parent is alive.

Unearned income includes investment type income such as interest, dividends and capital gains and other items such as Social Security benefits and trust income.
For more information see IRS Publication 929 – Tax Rules for Dependents and Children.

Question: Are car dealerships better more willing to finance cars than banks and stuff like that?

It seems like they would have more of a motive to finance someone a car since they’d make even more money, so are they more willing to finance to someone with not so great credit (a score of 680)?

Answer: There is a difference between better and more willing. They are often more willing because they sell the loans. They also normally charge a higher rate of interest. If you cannot qualify through a bank or credit union, I would recommend that you try to have someone cosign with you.

Please realize that cosigner is risking their credit on your ability and responsibility in repaying the debt. Do not ask this if you are not going to make the payments on time and as scheduled.

If a cosigner is unavailable and you have to get a high interest loan, I suggest getting a lower priced car and making the payments to establish better credit before buying the car of your dreams.

Often the key to building or rebuilding a credit rating is to delay gratification.

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