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Credit History Can Determine Auto Loan Rates

There are many differentials that will affect auto loan rates. The biggest factor is your credit score. Credit scores provide lenders with a summary of your credit outline. Your credit score and credit history is what is used to determine auto loan rates.

However, credit scores and your past credit history can be only one factor taken into consideration when lending institutions determine your approval or denial. Employment history, assets, income vs. expenditures, and previous lending are factors that credit lenders look at. There are auto loan lenders who think these factors outweigh your credit score. So, your auto loan rates may come in at a lower rate than someone with perfect credit. Interesting isn’t it?

You need to have a copy of your credit history and credit score before entering into any purchase agreement. Auto loan financing rates can vary from high to low very quickly when you are prepared. Dealers may tell you that your rate is going to be several points higher because of your credit score. They will tell you that you can definitely get financing, but only by paying higher auto loan rates. That is simply not true. Dealers will stumble a bit when they realize you are an informed consumer.

Remember, lenders look at three areas of your credit before they determine auto loan rates. First, your credit score and history; second, any collateral you may have to put against the loan; and lastly your income vs. expenses. You past may have been “colored” but you worked very hard to correct your errors. This is taken into consideration before simply denying a loan or giving you higher auto loan rates.

As previously stated, a low credit score may be a good thing. Having attributes in other areas can outweigh your credit score. The following is a guideline that you can use as a reference to determine where you fall in credit scoring. If your score is above 730, you have excellent credit. A good credit score falls between 700 and 729. Falling between 670 and 699, a lender will take a close look at your credit file. Any number below that puts you in the high risk category. This is when the other assets in your credit history come into play and may allow your loan to be approved.

Take the time to research and get as much knowledge as you can about your credit history and credit score. The more you know, better purchasing decisions you will make.

Financing Requirements
  • At least $1,500 gross monthly income required for credit scores less than 625.
  • Chapter 7 Bankruptcy. 341 meeting of creditors must be completed.
  • Chapter 13 Bankruptcy. An Authorization to Incur Debt from the trustee is required.
  • Zero auto loan repossessions in the last year unless included in a bankruptcy.
  • Approved auto loans are for buying a car from our authorized licensed car dealer partners.
  • US or Canadian Residents at least eighteen years of age.
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