Everyone knows that the better the credit scores and ratings you have, the better the interest rates on your car and home loans. What you may not know is that very different car financing services and loan options are available at each credit score level (i.e., excellent, good, fair, poor, etc.). The following will show what you can expect for financing offers at each of these credit score stages.
With excellent credit, you are actually in control of the offers, and you can select any of them or none of them. Most lenders and dealerships will compete to offer you lower interest rates and jumbo-sized loans for the big ticket items you want based on your excellent credit rating. Additionally, you can haggle over the terms of your loan and financing, allowing you to name the terms you are comfortable with. For example, if you want a car loan with no money down, no payments for six months and an interest rate of two-and-one-half percent, you might just get it when your credit is this good.
Good to Very Good Credit
You do not have the haggling power that someone with excellent credit has, but you may still be able to push for the loan terms that are most important to you. The lender may also request a small down payment on your vehicle, but he or she typically does not require or demand it at this point. Loans for luxury cars may be slightly more difficult to acquire, but not impossible.
At this stage, your credit scores and reports have some bumps, bruises and maybe even a black eye, so to speak. Your interest rates will be higher on whatever loans are offered to you, and the auto dealer may require a down payment just as a precaution for lending you money to buy a car. Financing and loans are not guaranteed, but many dealerships will work to find a lender who is willing to lend you the money and finance your vehicle.
Poor credit means that you will have a lot of struggles trying to get financing for a vehicle. It is not impossible or improbable to get a vehicle with poor credit. It is just extremely expensive. To put it another way, interest rates on loans will be very high and most dealerships and lenders will expect you to come up with a sizable amount of money for the down payment on your chosen vehicle.
Very Poor Credit
While most people might think that they absolutely cannot get financing on a vehicle with very poor credit, that is not true. There are some financing programs and options that work specifically with people with very poor credit to try and help them get a vehicle, and indirectly, help them get or keep a job that will then pay the lender. You may have to do some digging around to find these programs, but when you are stuck without a vehicle and no traditional way to buy one, these programs can really make a big difference. Click here to learn more about car financing services.