Can your credit score save you $7458 on your next car
That Sounds Crazy But…
Something as simple as a 100 point swing in your credit score could cost you over $7000 on a simple car purchase. Let’s look at the numbers
650 credit score should get you a credit union loan of around 6% over a credit score of 550 which could cost as much as 22% interest.
A $15000 car over 60 months at 6% would only cost $2399 in interest as opposed to $9857 in interest on the same car at 22%. WOW, that’s over $7000 just in interest on the same car. It’s crazy that sharp car shoppers will negotiate for every penny on the front end of the price but it’s the interest that can be the most expensive cost of a better car.
That’s why it’s so important to shop for a loan with your credit union and know what interest rate you can qualify for before you go shopping for a car. This is a great strategy but what happens when the Credit Union turns you down. The problem is how do you get a better credit score when you can’t qualify for a loan.
WE understand that it may be hard to get that first car loan when you have credit problems but it is not impossible. There are many places to start like Auto Credit Express which will help you connect to a dealer who specializes in bad credit car loans.
But here is the mistake many customers make at this point don’t buy something you can afford. You want a lower price vehicle at the shortest term you can afford. I know with all of the shiny newer cars at the dealer’s lot this is tough but it is important to keep it affordable to help you get back on track.
The second thing to look for when financing a car with bad credit is to make sure the loan company is reporting to all 3 credit bureaus. If you are at a dealer who is advertising “No Credit Check” or “Buy Here Pay Here” there is a great chance you are not receiving any credit for your payments. Some of these dealers will only report the bad stuff to the credit bureaus so make sure you check before signing on the dotted line.
Here are a couple of ideas…
Using a credit card is a great start to get your credit back on track. Revolving debt (credit cards used properly) can be valuable in raising your score.
The second option to look at is an installment loan or more simply a car loan. The combination of a simple credit card plus an on-time car payment can raise your credit score in as short as 12 months.
The secret to this success is clearing up any old collections or negative items on your credit score. This can be done yourself but isn’t easy and if you make a mistake it can be costly. We have found some success with a good Credit Repair company that can clean things up in as quick as 3 months.
The combination of cleaning up the old stuff with adding some positive can get you back on track in no time. This is the next step to your Better Car.