Are you concerned that your low credit rating will prevent you from getting the car loan that you need to purchase a new vehicle? Recent financial reports show that poor credit may not be the roadblock to a car loan that it used to be.
The recent downturn of the economy has changed the car loan guidelines in such a way that people with lower credit scores could not obtain funding. Back in 2010, the average FICO score of car buyers was considerably higher than it is today. This means that more people with low credit scores are getting car loans and buying from dealers, like Frank’s Auto Credit.
Experts in the industry generally agree that these positive changes are due to the fact that car buyers are actually paying back their loans as they are supposed to. Late payments have decreased overall and complete failure to pay loans have dropped significantly.
Consider these tips before shopping for a car:
Get the official copy of your credit score before you start shopping. While you can go to AnnualCreditReport.com each year and get one free copy of the major credit reports, you do need your FICO score to understand what kind of loan you are eligible for. You can purchase your score at any of the major credit bureaus or from myFICO.com. It is it vital to get and updated credits for that includes all of your recent activity to make sure you have an accurate representation of your status.
The myFICO.com web site includes a handy chart that reveals the average interest rates paid by people with different scores. It also shows what the average payment could be depending on the length of the loan: from 36 to 60 month ranges.
Do not take one look at your score, see a low number and automatically assume that you’ll never get a loan. Different lenders may accept different scores and there is no official cut off line were loans will not be given. Take, Frank’s Auto Credit, as an example – we do not have any credit score minimum.
If you get a copy of your FICO score and find it to be subprime, start saving more money before you need to buy your car. The larger the down payment you can make, the better car loan you can get even with a poor credit score. The consumer adviser from Edmunds.com, Ronald Montoya, suggests saving up 20% of the total price of the vehicle as a down payment. This number is for new car purchases. For a used vehicle, at least 11% in cash is acceptable. While this is a good idea or people with any type of credit score, it is exceptionally important if you’re number is very low.
While having a new car may be very attractive, reliable used cars can be just as good. If you have a lower credit score, getting a loan for a used vehicle may be easier than a more expensive brand new vehicle. While interest rates may be higher, the overall loan balance should be much smaller. This can result in more savings over the life of the loan. In order to make sure you are getting a good deal, always check out used car price guides before visiting the dealership.
When you need a vehicle, it can be too easy to get wrapped up in emotional decisions, but those can lead to buying cars that you cannot afford. The objective when looking at the overall reliability, any faults the car might have, the car loan deal you are being offered and your personal finances to make sure it is affordable for you.
Much of the credit concerns outlined above are not a concern at a dealer like Frank’s Auto Credit. Even if you have damaged credit, all you need to do is follow these simple steps to buy from Franks!