How Does Credit Impact Car Loans?
Securing a car loan at a dealership is a popular choice because of the dealership’s relationships with banks and loan companies and the special incentives and finance programs they can offer. Plus, it’s convenient! And Toyota of York is no exception. Our finance center is prepared to make the financing process as stress-free as possible, and we’ll do our best to help our customers with any credit issues find the best plan for their situation. If you’re ready to finance your next new or used vehicle, here are a few things you should know before applying for financing:
The Importance of Your Credit History
Down payments are extremely important to loan companies; this is their way of protecting themselves in case the borrower defaults. When you’re applying for financing, one of the first things a dealership will look at is your credit report. They will look specifically at:
- Your amount of debt
- Your payment history
- How long your line of credit has been in use
- Your major debt total
These factors help loan companies assess the likelihood of your repaying the loan, which will influence the interest rates you’ll receive from the lender. Customers with low credit scores are considered high-risk borrowers and will get higher-than-normal rates, if approved.
Qualifying for a Loan
If you’re credit-challenged, it’s a lot more difficult to qualify for auto financing with a zero down payment. Borrowers with credit issues may have to either make a cash down payment or an equity trade-in. An up-front payment may influence the lender to approve your application and possibly lower your monthly payments.
If you have less-than-ideal credit, another way to qualify for a loan is to find a co-signer. Doing so will give the dealership, bank or credit union more confidence that their loan will be repaid on time and in full
For more information on how we can help finance your next vehicle, give us a call or stop by our dealership at 1885 Whiteford Road, York, PA 17402. Toyota of York proudly serves customers from Hanover, Lancaster and Elizabethtown.