How Credit Ratings Affect Auto Financing
How Credit Ratings Affect Auto Financing
You don't necessarily have to have a good credit score to get auto financing, but credit ratings will definitely impact your interest rates.
Being deemed subprime doesn't mean that your borrowing days are over because lenders are getting stricter. You just need a lender that specializes in bad credit car loans.
Many dealerships will lie to you about your credit score when they pull it for auto financing. As a former car salesperson I've seen the managers time and again tell a customer that their score was 10 to 20 points lower than it really was. I also saw them tell customers their real score but lie about what bracket (sub-prime, prime, or premium) their credit rating was valued at.
Once you know your credit rating and whether or not you have a good credit score you can decide if you want to try to get auto financing from a major lender or if you should try one of the auto lenders that specialize in bad credit.
Here's Some Credit Rating Facts:
A score of 650 or to 675 is generally considered average. You should have no trouble getting a good interest rate through just about any lender. Although pre-approval is still the best route to take when you shop for a car, regardless of your credit rating.
If you have 600 to 650 you can still go through a major lender but your interest rate might be a few percentages above the person in the 650+ category.
675 and above is a prime credit rating. You can pretty much get any auto financing you apply for so look around for a good interest rate because you earned it!
580 to 620 is considered the sub-prime category. This means you should definitely consider using a bad credit auto lender instead of the dealerships. Many major lenders will shy away from you or else set an extremely high interest rate if you do get auto financing.
If you have errors on your credit report (and 85% of us do) then consider a service like LexingtonLaw. For a monthly fee (that you can cancel any time) they will help you to legally get rid of those errors and who knows, you might find that instead of having a sub-prime credit rating you're suddenly considered for prime rates!
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AUTO LOAN CALCULATOR
So you know what your pre-approved for. But what will that translate to in monthly payments? Here's a handy car loan calculator.
