When asking about an auto loan, you're essentially asking for a line of credit that'll cover the price of a vehicle. Whether you're buying a used car or a new one, a loan can help you build your credit score if you consistently make payments on time. However, your current credit score can also impact your ability to get an auto loan in the first place. Learn more about the relationship between loans and credit by considering this guide.
How Can Your Credit Score Impact Your Auto Loan?
Your overall credit score will determine the interest rate set for your automotive loan. If your credit score is high, you can expect a lower interest rate every month. This means you'll pay less than those with lower credit scores. Therefore, improving your score can help you save hundreds of dollars or more every year on interest.
Why Does Credit Score Matter?
Since you'll be financing your car purchase with a bank or credit company, you need to show these institutes that you're financially capable. If they don't think you're responsible, they may deny your loan request. Otherwise, they'll accept your request with a higher interest rate to offset the risk.
How Does Credit History Come Into Play?
The number one contributor to your credit score is your payment history. Making payments on time will show lenders that you're responsible and trustworthy, which will make it easier for you to get a loan from them. A car loan can be a large sum of credit. However, by making payments on time, you can make your credit history look attractive to lenders in the future.
If you’re currently in the market for a used car, reach out to the team at FacilDeal Auto Center in Haines City, FL. With over a decade of experience, they can help anyone find their perfect vehicle. To learn more about how they can help you find the used car of your dreams, give them a call at (863) 588-2159. To take a look at their inventory, visit their website.