Despite the fact that the economy is slowly recovering from the recent recession that was brought about by bad credit decisions, the credit requirements for most loans still remain tight. This means it will be very difficult to find car loans, let alone those with favorable interest rates if your credit score is below average. Therefore it is important to consider the minimum credit score for an auto loan before pushing through with the loan.
The credit score needed for an auto loan varies with each lender. However, a credit score in the range of 500 to 579 is generally considered bad credit because 500 is the average minimum credit score for an auto loan. It will be extremely difficult to find a bank, or a credit or financing company willing to lend you money for the loan. In rare cases, a car loan may be approved but it will surely be beyond favorable rates, often times even reaching the maximum interest rate legally allowed in the state.
It is highly discouraged to push through with the loan if you have the minimum credit score for an auto loan. Due to the very high amount a borrower will have to pay when choosing to push through with a car loan, it is advisable to choose a second hand car instead to save on interest payments. This will result to lower monthly payments which at first may seem insignificant but will really be a lot cheaper in the long run. Even still, a better choice will be to give up on planning for the car loan altogether until your score goes well beyond the credit score needed for an auto loan.
Meanwhile, having a credit score in the range of 580 to 619 will be considered minimal but fairly acceptable. It will be very unlikely that you will find a lender who can offer you a traditional loan with acceptable rates. In fact, just like having the minimum credit score for a car loan, there will still be a huge probability that the interest rates will be the maximum allowed by the state.
A borrower with a credit score above 620 will not have to worry about finding lenders who are willing to offer traditional loans with acceptable interest rates. Although the interest rate is still high compared to interest rates for credit scores above 700, this credit score is still the recommended credit score for people looking for car loans fast.
As a general rule, it should be remembered that a bad credit score will guarantee higher interest rates. This is true if your score is the minimum credit score for an auto loan. Likewise, choosing a longer payable period will result in a higher total payment. For optimum savings, it is recommended to postpone the car loan until your credit score reaches 620 and choosing a shorter paying period.
If you are just starting out on your own, you may have a hard time getting credit cards or loans because of a lack of credit history. You must build credit to get access to the best credit cards and loans, but you can mess things up if you don’t know how to do it […]
One of the worst feelings you can have is when you have a bill coming due and no way to pay it. You have either spent all of the money or you have to spend it on something more important. You don’t want to have to deal with those phone calls from creditors because you […]
[Y]ou open up the credit card statement only to see another $30 late payment fee assessed. Ugh! You can’t believe you forgot to make a payment on time again. In between running the kids to daycare or school, meeting with clients and taking care of errands on the weekends, some things just get pushed aside. […]
[G]etting approved for a credit card is a sign of responsibility. It can give you freedom with your finances. For instance, you can book a hotel or buy airline tickets, which would be difficult without a card. You should know why you want a credit card and understand if those reasons are good or bad. […]
You hear financial experts preach about getting out of debt. They tell you to cut up your credit cards and pay for everything with cash. While some people may need to follow this advice, you may wonder if it’s the case for everyone. Should you avoid ever having any kind of debt again? Not Avoidable […]
[T]he busy summer season is behind everyone, and the upcoming holiday season is a few weeks away yet. Now is the time to focus on goals you have set. One of the most important is saving money. Fall = Transition Time You are transitioning from the lazy days of summer, times when you spent a […]
[W]hen you hear about identity theft, you may think about all of the public computers in use as well as the credit card machines in stores. While these are all areas that are vulnerable to hackers and those who want to steal your identity, one of the most dangerous areas is at home. Why? Because […]