If you are thinking of purchasing a car through financing there are important issues about your credit report and the APR interest rate on an auto loan your should know about. Whether you are looking for a bad credit car loan with no money down, a trade-in or low APR or zero interest loan, you credit report is the first step.
It’s quite simple that having a good credit score is essential in finding a car loan with reasonable interest rates. Low rates mean low monthly payments. Therefore, you first need to understand what credit score is and how credit score affect a car loan rate.
Vantage and Fico Scores for Car loan
Super prime - excellent credit
FICO Score: 740 plus
VantageScore: 801-990
Prime - good credit
FICO Score: 680-739
VantageScore: 701-800
Non-prime - average credit
FICO Score: 620-679
VantageScore: 641-700
Subprime - bad credit
FICO Score: 550-619
VantageScore: 601-640
Deep subprime - really bad credit
FICO Score: less than 550
VantageScore: 501-600
What is credit score?
Firstly, you should know that your credit report is your credit history or profile established by Fair Isaac Company. It is the main indicator which shows how reliable you have been in making payments to bills and debt and it is primarily what every financing company looks for to determine whether you are worth the risk of financing for a car purchase.
The process how your credit scores are determined is quite simple. The process is very involved and you should remember that filings for unpaid bills, bankruptcy, etc can negatively affect your scores.
When you have lower credit scores, it would mean a higher risk to the credit institutions simply because you are more likely to default on auto loan payments. There for you will pay a higher interest payment. It is not worth knowing the lengthy process of how it is calculated, as you should just remember that the faster you make payments the better scores you will earn.
You should also be sure that everything is accurate on your credit score, particularly when you apply for a car loan as it can help you get the best deal possible. Most often, companies can make a mistake when tracking this score and so it is important you be sure everything is correct.
In the event that you find errors on your credit report, contact all of the credit reporting agencies, and the creditors to rectify the issue. Once the credit errors are corrected, you will see an increase in your credit score. You should always remember that your credit scores can largely affect the rate of interest you are offered for a car loan.
