The higher your credit score, the lower interest rate you can expect to get on your car next car loan. Though this number can vary, you should aim to have a credit score of 660 or higher before buying a car according to a report by Experian, one of the major credit bureaus. Usually, this will ensure you receive interest rates under 6%.
Before you apply for an auto loan to finance your next car, it’s important to examine your credit score. Credit scores are determined by a combination of a few different factors, including:
Not only does your credit score determine which car loans you’ll be eligible for, but it also impacts the loan agreement and interest rates you’ll receive.
Even if you have less-than-perfect credit or are just beginning to build credit, there are a few things you can do to boost your credit score before applying for an auto loan. Start by reviewing your credit report and disputing any errors you find. Having errors removed can quickly raise your credit score. Along with that, you’ll want to:
In addition to following these tips, saving for a down payment can help you get approved for an auto loan and may even lower your interest rate. The more money you put towards the down payment, the less you’ll need to finance with the auto loan.
Getting a car loan can help you build up your credit by growing both your payment history and your credit mix. Out of all the different factors that work together to compose your overall credit score, your payment history impacts it the most.
Having a good credit mix means you have a combination of things like loans that are paid off in monthly installments and credit cards that are paid off at different intervals. If you currently only have credits cards, a car loan can help boost your credit score by adding loans into the equation.
Buying vs Leasing
We Buy Cars
How to Budget for a Used Car
Tips to Improve Credit Score
How Do I Apply for a Car Loan
Ready to find out more about our auto financing options? If so, our dealership offers a variety of virtual financing tools that you can use to get started from home. Check out our secure financing application or head over to our payment calculator to begin.
Then, contact us at Watermark Toyota of Madisonville to speak with a representative today. We look forward to helping you take the wheel of a vehicle you’ll love driving near Madisonville, Owensboro, and Henderson, KY, for years to come!
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