When it comes to getting a car loan, a credit score can be a very important part of the process. Unless a consumer has enough money on hand to purchase the car outright, they will need a car loan and a credit score will go a long way in determining how much money they can get and at what interest rate.
If a consumer is interested in a car, there are a number of different ways they can get the money to purchase the car. They can get the money through a loan from a bank or a credit union, or they can rely on the car company’s auto financing division to help them get a car loan. But determining favorable that car loan will be depends on the applicant’s credit score. If their car loan credit score is good, they may be able to get terms as low as zero percent interest for 60 months; if it is poor, they will likely have to pay a lot more money in terms of interest in order to get the car they’re looking for.
A car loan credit score is looked at by any lender, though their standards may differ. Banks may offer a lower interest rate on a car loan if a consumer’s credit score is good, but can be a lot more selective in who they accept for a loan than a auto finance company may be. The car finance company may be willing to take a greater risk on a customer due to their need for business, but their interest rates may be a lot higher than the bank or credit union was advertising.
In order to pay less when a car loan credit score is less than optimal, the customer will probably have to be willing to do a few things to help their cause. One is to bring a respectable trade-in to the dealership as part of the package. If the car is paid off and is worth at least a quarter of the purchase price of the new vehicle, it will help their cause. If the customer also comes with a down payment of 10 percent or more, this will also cut down the amount of money needed to be loaned. In this case, the car loan credit score will not be quite as important, as the total money changing hands in the loan will be significantly reduced.