Credit scores and used car financing are very closely linked to one another. Put very simply, if you want to get a good rate on a used car loan, you need to have good credit. There are some things we can do to quickly improve our credit scores and improve our chances of getting that cheap auto loan we need. Securing affordable financing can save you thousands of dollars in interest over the life of the loan.
Improve Your Credit Score
There are some things that will appear on your credit for many years, such as late payments on revolving credit accounts. Unless you can get a credit bureau to remove these things from your report, there is little you can do about them. But it is important to know that credit accounts in collection are a lot more damaging than the appearance of a few late payments. If you have any accounts in collection or on their way to collection, get them taken care of and current before you try to buy a used car.
It is senseless to buy a used vehicle with a terrible credit score if you have to borrow money because the only way you are going to get that auto loan is if you are willing to pay incredibly high interest rates on the loan. What this means is that you will have to pay thousands of dollars in interest on a used car even as it is quickly depreciating. Paying a lot of interest on a vehicle loan of any kind is an unwise financial move because of the concept of depreciation.
Shopping for Used Auto Loans
Getting credit cards out of collections and paying all of your bills on time to establish a new pattern of financial responsibility can at least demonstrate to a lender that you are making an effort. It can also increase your credit score quite a bit in a very short period of time. When the time is right for you to go car shopping, before thinking about car seat safety belts, you should think about securing a used auto loan before you even hit the dealer floor. This ensures that you don’t get pressured into accepting a high rate in the excitement of the moment.
Contact some lenders or do some research online and see what kinds of programs they have in place for nontraditional borrowers or folks with credit issues in their histories. In some cases banks, credit unions, and other lending institutions might have a program specially designed to help someone get into a loan and begin rebuilding their credit. Buying a car on credit is actually a great chance for you to do that.
Pricing for Used Cars
That is one reason among many others why it is so important to make sure to stay within your means when you go to buy a used vehicle. Do not pay more than you can afford, and do not spend enough money to put strain on your finances with your payment each month. You will have other opportunities to buy dream cars down the road. For now, be content to get one that’s reliable and affordable, and one that can help you build your credit profile.
And find a used car that is cheap to insure so you can save even more. Use our free quote service and find out some free no obligation prices from leading insurers in your home area. Fill in the simple form and see how much money you could save as part of your used car financing research effort in thinking of buying a used car.