Purchasing
a car is a big decision in your life. Investment of money and effort
are equally expended during the entire car buying process. However, all
too often you will require a financial backing in order to make your
dream car a current reality. Credit score plays a crucial role in
determining the outcome of your auto loan application. Many a times,
buyers neglect the importance of a credit score. However, the presence
of a strong credit score can become a backbone in getting good interest
rates as well as help you to obtain your dream car.
What is the Average Credit Score for getting an Auto Loan?
Typically,
credit score ranges from 300 to 850. Amongst the various categories, if
your credit score lies below 620, you will be regarded as a subprime
consumer. A median credit score of 707 and above is the ideal fit that
will ease your car financing process. Therefore, a credit score of 707
or more attracts lower interest rate and gives you the opportunity to
make the most out of your auto financing deal.
A Shift in the Lending Pattern: What does it mean for you?
The
lending patterns of the banks as well as lenders have seen a
significant shift in the last two years. In a Bloomberg report, the
Federal Reserve Bank of New York has declared that the median credit
score for auto loans in the Q3 of 2017 was 705 as compared to 696 in Q3
2015. The data strongly suggests that online auto lenders
are increasing their standards and scrutinizing the credit score before
approving a loan request. Super-prime and prime credit consumers will
enjoy good rate of interest as well as earn a higher probability of
getting faster loan approval.
What Steps can you take to improve your Chances of Auto Loan Qualification?
1) Stable Income & Employment
Income
and employment are two important factors that will help you build
creditworthiness in the eyes of the lender. Make sure you choose a car
that you can comfortably pay off in regards to your current income.
Additionally, the longer you have stayed at a job, the better your
chances of loan approval. College graduates or first-time car buyers
should be employed at the same place for at least six months to display
stability.
2) Repair any errors
Prior
to walking into the car dealership, get a report of your credit score
and check for any errors that may have gone unnoticed. Correct the
errors before you apply for car financing. Also, make it a point to pay
off your past debts and clear any risky venture that may diminish your
chances of auto loan approval. Minimized errors and cleared debts will
give you a greater leverage while negotiating your auto loan.
Obtaining
qualification for an auto loan can be an easy task, provided you are
proactive before vising the dealership. Maintaining the ideal credit
score will help you to get the best rates. And, it will ensure that you
are able to pay off the loan easily. So, do not ignore the importance of
your credit score.
Remember
the best way to prepare for auto financing is to keep your credit score
in check and take preventive measures to improve it for a smoother auto
loan approval.
Buying
a car becomes easy with a good credit score. But, not everyone has the
advantage of a stellar credit history. If your credit score is below
average, apply for a bad credit auto loan. Choose a reputed subprime car financing company to obtain car financing quickly. Apply now for guaranteed auto loan approval.
