Are you in the process of purchasing a new vehicle, possibly your dream vehicle and are looking to see what qualifications you need to be approved? Or have you ever been denied a vehicle because of your credit history, but don’t quite understand why you were denied? Well, if you’ve answered yes to either of these questions then you’re in the right place. In this blog we’re going to explain how your credit score can affect a banks decision to approve or deny you for an auto loan. The first thing we need to understand is that your credit score is more than just a 3-digit number. It describes your ability to pay back a loan. Let’s paint a quick scenario to get you to understand the essence of this blog.
Say we have to people Bob and Emily. Emily has a great credit score of 790 while Bob has a poor score of 615. Because Emily has a high credit score, she is highly trusted by banks to pay off any loan they give her for a car. Bob on the other hand is as trustworthy. His low score of 615 shows that he is reliable enough to lend money and be able to pay it back on time. When Emily and Bob enter a dealership and find the car that they’ve been dreaming of their whole life, the dealer must run their credit score to determine different factors such as interest rate, monthly payments, etc… Both their scores get ran and the results are back. They were both approved! But wait, there are some significant caveats. Emily’s monthly payment on her new car is $200 with a 6% interest rate at $0 down. Bob on the other hand has a monthly payment of $480 with a 17% interest rate at $2000 down. How is this possible when they’re both purchasing the same exact car at the same exact price? “Credit score” is the answer. When purchasing your vehicle, your credit score will make a significant difference in many areas such as monthly payments, down payment, interest rate, and more. So, what are you waiting for? Get started today with Apluscredituniversity!