If you have been thinking about acquiring a loan for a coveted automobile, it turns out your credit score is a major factor in landing a suitable auto loan.
Credit score plays influential role in auto loan
According to LendingTree, a credit score plays a pivotal role in obtaining an auto loan. LendingTree came to this conclusion by examining more than 20,000 loan offers. Among all other factors, the source found that a credit score had the largest impact regarding the interest rates that are offered to prospective buyers. This is plausible, especially given the interest a lender has in seeing the loan being paid off eventually. If you are responsible with money and continually make payments when you are supposed to, it's likely that the interest rate you get on a auto loan will be better than the loan given to another individual with a lower credit score.
Low credit score correlates with high interest rates on loan
The source also reported borrowers with lower credit scores are much more liable to get loans with higher interest rates than borrowers with higher credit scores. So, if your credit score is a littler lower than where you would like it to be, and are considering taking out a loan toward a vehicle, it may be prudent to wait to take out the loan.
"The impact of credit score on the cost of the loan over time can be substantial and, given the current historically low rate environment, the differences are even more striking for credit-challenged consumers," said Rick Finch, Senior Vice President and general manager of LendingTree Autos. "Awareness of your credit score, how it impacts your rate and the steps you can take to improve it over time are key. There is no easy fix for a low credit score, but with time and patience the effort is well worth the savings and peace of mind."
Likewise, according to CNBC, checking the dominant credit reporting agencies will be a helpful move in determining the status of your credit.
"You want to check all three [credit-report bureaus] because you don't know which one the lender will use and you want to give yourself time to fix any mistakes," said Gerri Detweiler, director of consumer education for Credit.com, according to CNBC. "I found a mistake when I went to buy a car a few years ago, and if I hadn't straightened it out, it would have cost me a lot of money."