Auto Credit

Auto credit can be a surprisingly elusive thing to obtain, even when there seems to be one ad after another on the TV promising financing for anyone. In this article we’ll explain the basics of how auto credit works, as well as some tips on how you can get that dealer (or bank) to break down and lend you the money to buy a car. That’s what it’s all about, after all! If they are going to flaunt all those shiny automobiles in front of our eyes, then we’re going to find a way to drive them off the lot.

All it takes is a little understanding of how a lender views a potential borrower and then it starts to become obvious what you can do to get auto credit working in your favor. Remember: he or she wants to sell the car to you (that’s their business), but they also want to assess their level of risk correctly.

In the world of auto credit, as with most loans, it is all about your credit score. If your FICO is at or above about the 680-700 range, then you will probably be able to secure an auto loan at the prime rate. (This is the best and cheapest interest rate available.) If you have a long history of paying back loans in a timely manner, then your credit score will be fine and no car dealer is going to turn you down, or even give you a bad credit loan. He’ll be happy to take exchange a lower payday for himself in exchange for your record of reliability.

Unfortunately, many of us won’t be able to obtain such favorable auto credit right out of the box. Instead, we have a little less desirable FICO from the lender’s point of view. In a case like this, you can improve your odds by saving up for a bigger down payment on the car. Or else, you can pay off other debts that may be dragging your score down. And always pay your bills on time; late payments also effect your score.  This is all really just Auto Credit 101, but in fact these are the basics that make the biggest difference.

One last option may be to shop around. See if you can find a bank or credit union who will finance your auto loan. Then you can take that with you to the car dealership and the guy may turn out to be so hungry to make the deal that he lowers his interest rate for you, or gives you some other sort of a favorable deal. You can play multiple dealers against each other. “Well, Johnny’s BMW told me he’d give me credit at 9%. Can you beat that here at Billy’s BMW?”

More and more, the lending business is moving online. These lending companies can find the exact kind of borrowers they specialize in through the wide reach of the world wide web. Now, some of these outfits may be a little shady, so it is important to do your own research before signing anything on the dotted line. But all in all, there are legitimate deals to be found in this venue, just like outside of the web.

Remember that doing this type of research always pays off in the end in order to get the most favorable auto credit that you can possibly get. This is my mantra: shop around, see what’s out there. Before you know it, you’ll be driving your new BMW off the lot and you will have gotten a very fair price.