Americans Well-informed on Automobile Retailing Economics (AWARE) released a statement on Monday saying that with 7.5 million young adults preparing to head off to the dorm or apartment for college this fall semester, parents should have “the talk” with them-the talk about keeping their credit healthy and about credit’s relationship to financing a vehicle.
AWARE emphasizes what so many financial planners (even amateur ones like a mom or a dad) readily teach people: protect your good credit rating at all costs. Credit problems encountered now, even if they are eventually gotten out of, can stay on your credit report for years to come or at least affect your credit score in the future.
If you have bad credit, you will not be able to finance a vehicle at the best rates. Not paying or not paying on time now leads to your being forced to pay more later.
Although people can have bad luck and it’s not always their fault if they go through a bad financial time when they get delinquent on their bills or loans, their credit reports are what lenders are going to look at first and foremost. Lenders are more likely to be understanding of financial bad luck streaks and cut you something of a break if you can otherwise show responsibility and a proven willingness and ability to get yourself out of financial trouble if you have fallen into it in your past.
“The decisions young college students make today will affect the rate at which they can finance a car or truck tomorrow. Today’s financial decisions will also affect the amount of credit a finance company will extend to a borrower. Because credit history plays such an important role in determining the annual percentage rate of any form of credit, demonstrating responsibility with credit as a freshman or sophomore says an awful lot to a financing company when the time comes to buy a vehicle,” said Eric Hoffman, spokesman for AWARE.
When a young man or woman first goes off to the campus life, especially if one goes off in a new vehicle, the joy of the sense of freedom can sometimes override rational or responsible decision making, especially with regard to money. It becomes very tempting to pay loans or bills late so that there is more “beer money”. It also becomes all too easy to lose track of finances and spend far too much money or buy things that aren’t really that important in the long run.
AWARE emphasizes keeping careful records of one’s expenditures and always putting responsibilities ahead of parties.
“Buying a car or truck along with leading the collegiate life represents the ultimate freedom for many college students. We’re working to educate both first-time and experienced buyers on the benefits of establishing good credit now. It’s a lot easier to establish good credit initially than repair bad credit later,” emphasizes Hoffman.
Sources of information:
Americans Well-informed on Automobile Retailing Economics (PR Newswire), “Parents: Is Your College Student ‘Jonesin’ for a Car or Truck? It’s Time to Have ‘The Talk,’ Says AWARE”