When it’s time to buy a new car, most people go through the same steps before going to the car lot. First, you figure out what type of car you want, then you do a little research to find the best make and model to meet your needs. Now that you know what kind of car you want, you probably have a good idea of how much it should cost, which means you can put a good sized down payment in the bank, and then you’re ready to head to the car lot.
Well…not quite. Having the down payment is great, and the bigger the better, but it’s not the only thing you should have in hand. Before visiting your local dealer, Len Stoler Dodge recommends that you check your credit score and make sure everything is good there. Your credit score determines almost everything about how your car buying experience, everything from how much you’ll pay, your monthly payments, and even sometimes the type of car you’re allowed to buy. Here are three ways your credit history can affect your car purchasing power.
Total sticker price is only one component of what you’ll end up paying. Total price paid at the end of your loan is determined by three things, sticker price, interest rate, and length of loan. While your down payment reduces the sticker price, your credit score determines the type of interest rate you can get, and also the length of loan you qualify for.
Your monthly payment is based on two things, total price and length of the loan. Meaning that the better your credit score is, the better your interest rate will likely be meaning the lower total monthly payment you’ll ultimately end up with.
You’re credit says a lot about you in the eyes of the bankers. In their estimation a lower credit score means that the buyer is at a higher risk of having their vehicle repossessed. What this also means is that they want those people in a care that’s going to have some equity left if the worst happens. So for those with less than perfect credit, you may be limited to only purchasing new vehicles which means more cost.
Your credit is one of the most important factors in your car buying experience, so keeping your credit in good standing will put the car buying power back in your hands.