Your credit rating depends on how much you use credit, your payment history, your outstanding accounts and any negative reports.
Negative information can include foreclosures, liens and judgments, but the one which typically lands people in trouble is late payments. Considering negative information can stay on your record for seven years, it's especially important for young people to pay on time.
When it comes to rating your use of credit, the rating agencies look at how many accounts you have open and how many times you've applied for credit. So if you're trying to clean up your credit before buying a car, pay down existing balances as much as practical -- and stop applying for credit cards for awhile.
Your credit score is a measure of your likelihood to not repay the loan. The best way to counteract it is with a good solid downpayment.
The main reason the mess in sub-prime housing hasn't made a mess in sub-prime auto financing is that autos are easy to reposess. It's also easier to build up equity in a car than it is a house -- $6,000 down on a $12,000 car is something; $6,000 down on a $200,000 house won't get you anywhere.
A great place to get downpayment help is your tax return, and nowadays, with government tax rebate checks coming in May, you're in ever better shape.
Dealers will tell you: They sell a lot of cars around tax time.
Set a budget. Use an auto loan payment calculator to help figure out a payment you can handle.
Research the best cars in your price range. Don't worry about getting a car a few years older than you'd originally thought; cars last a longer than they used to.
Build up the best downpayment you can.
Take 60-seconds to fill out our online car loan application. You'll hear from a dealer fairly quickly to make an appointment (because we have to do things face to face for security reasons). If you like the available vehicles and loan terms, sign and drive. If you don't, walk away. No obligation, you know.
A low credit score is not the problem it used to be. Dealers have gotten better at helping people get approved for car loans. Less hassle, more driving.
