How does your credit score impact your new car purchase?
The better your credit rating, the easier it is to get your new car financed. How does your credit score impact your new car purchase?
What’s a good credit score?
The plain truth is that your credit score leverages your buying power. Your loan amount and interest rate are directly related to your credit score. According to an Experian report, at the end of September 2019, 715 was the average credit score for a new car loan and 662 for a used car loan. If your credit score falls below 600, financing for a new car is possible, but you likely face higher interest rates. You should improve your score before purchasing a new vehicle if it is low.
How do I get financed for a new vehicle purchase?
Be assured you do not need to finance your car with a dealership. Although some dealerships offer competitive financing options, it’s smart to shop around online and through your local bank or credit union. You may also consider online financing options which continue to grow in popularity.
Do you have a relationship with your own bank or lender? They are an excellent resource here as well. With a direct lender, you are guaranteed your rate will not be increased. CarSnoop pro tip: Dealers can raise your interest rate up to three points.
Be careful when shopping around for lenders; too many reviews of your credit could impact your score.
Should I lease or buy a new vehicle?
If you’re looking for a more flexible financing option, leasing might be the way to go. When you lease a car, you basically pay to use the car for a period of time – 36 months is average – paying only a portion of the cost of the car. Leasing monthly payments are typically lower and enable you to drive a new car off the lot with less invasive financing reviews that occur when you attempt to buy a car.
The downsides of leasing versus owning a car do exist. With a lease, you will be bound to a strict rule for set mileage. If you decide to keep the car after your leasing term is complete, you could end of paying more than you would have if you purchased the car from the start. You could also be penalized for exceeding your mileage allowance at lease turn in.
In all, CarSnoop works to navigate you through a new car buying experience that eliminates stress and saves you time, money and energy. Want to have an easier buying or leasing experience? Contact CarSnoop.