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How Credit Score Impacts Car Loans In Simcoe

How Credit Score Impacts Car Loans In Simcoe

Credit scores are an inescapable fact of auto loans. They are an inescapable part of any finance and something we all have to make our peace with. But not many of us actually know how credit score impacts car loans and applications, that's okay!


Our Simcoe auto loan team gives us an overview of how it all works.


Credit Score and Car Loans


Your credit score is a numerical expression of how you handle debt. Depending on the bureau, it will be a score between 300 and 900.


The better you are with debt and with borrowing, the higher your score. If you’re not so good with debt, you’ll have a lower score.


Auto loan companies and all lenders will check your credit score and your credit report. They are looking for how you manage debt, how much debt you have, whether you always pay on time, the different types of debt you have and anything else they want to know.


You can check your own credit report and score with either TransUnion or Equifax. You’re entitled to one free check per bureau per year.


How Credit Score Impacts Car Loans


As you now know, your credit score is a numerical indicator of how good you are with debt. The better you are, the higher the score. The higher the score, the lower the risk you are to a potential lender.


Conversely, if you have had issues with debt in the past, your score will be lower, which potentially means higher risk for any lender.


Most lenders will assess the amount you’re asking to borrow with the level of risk you present. Low risk borrowers can borrow more, with reasonable interest rates.


Those with lower credit scores may not be able to borrow quite so much or be charged a higher rate to offset the increased risk the lender is taking on.


Different lenders handle this in different ways but it’s essentially about risk. The lower the risk you are, the more likely lenders are to work with you.


What if I have a low credit score?


Lower credit scores can still access car loans but it may require more work from you.


It may mean borrowing less so you present less of a risk. It may mean taking out a specialist bad credit car loan. It may mean using a coborrower or co-signer.


Much depends on your specific circumstances and the lender(s) in question.


Typically, those three solutions are the most effective at being able to borrow for an auto loan with lower credit.


Anyone, with any credit score can access auto loans. It’s just a matter of knowing who to go to, how to frame the application and how to prove you’re a low risk.


Those are all things we can help you with.


When you’re ready for a car lease or loan, get in touch with the Simcoe auto loan experts at Northway Ford for great deals on auto finance.


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