AUTO LOANS
Securing financing for a new car can be a bit frustrating, especially if you don’t know where to start and how it will affect your credit report and scores. The dealership might be able to help you by providing different banks that can potentially get the loan approved but should you move forward? Will a new loan increase or decrease your credit score? What if you are trying to purchase a home soon? Here a few key points to consider before buying a new car.
- INQUIRIES – Every time a financial institution such as a bank pulls credit, the scores decrease about 3-6 points. A dealership usually pulls credit with multiple banks in order to get the best deal. If 5 banks pull credit at 3-6 points each time, it will be about 15-30 points!
- SHOPPING WINDOW – The credit bureaus allow you to have numerous inquiries within a “shopping window” in which you won’t get penalized for every individual inquiry; however, all inquiries must be for the same tradeline (car loan, mortgage, credit card) and once that shopping window expires all those inquiries will affect your credit scores.
- PRE-APPROVAL – Getting in contact with your favorite bank and getting preapproved before walking into a dealership can help avoid having numerous inquiries on your file. It will also give you an idea of exactly what you can afford and not go over your budget.
- INTEREST RATES – The higher your score, the lower the interest rate will be. Most dealership will approve the loan even with “bad credit” but the interest rate will probably be extremely high. Scores in the 800s usually mean interest rates in the single digits (0%-9%) while scores in the 500s could mean interest rates in the upper twenty’s or even higher (26% and up)
It is always a good idea to improve your credit and increase your scores before moving forward with a new car loan, otherwise, you could end up paying thousands more due to the high interest rates imposed by the dealership. Having access to the right tools and resources to help you make the best responsible financial decision will give you the ability to save money in the long run.
Please review the online applications below for details regarding the terms and conditions of each company as well as their offers, fees and required documentation for the process. Do not hesitate to contact us with any questions or if you need additional assistance.
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Ideal Credit and its affiliates are paid commissions on a per sale or per lead basis for all credit card offers displayed on this website. This content is not provided or commissioned by the company whose products are featured on this site. Any options, analysis, reviews or evaluations here are those of the author's alone and have not been reviewed, approved or otherwise endorsed by third parties.
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Credit cards can help rebuild your credit history by establishing positive trade-lines on your credit report. Unlike prepaid or debit cards, monthly payment activity will be reported to the major credit bureaus on all transactions made with unsecured & secured credit cards. Our company has partnered with several banks to help you get approved for your next credit card.
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Clients looking to quickly boost their scores can use "piggybacking" to rapidly gain positive credit history. This process can help expedite the time it would normally take to increase your scores and get you approved for a big purchase such as a mortgage or an auto loan since it will add years worth of history to the report in a matter of months.
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