Many car shoppers depend on a combination of finance and loans to take home their desired vehicle. While some decide to go through their bank or credit union to finance, a large amount of people decide to do what's called "dealership financing." Dealership financing is usually considered the more convenient option, as you buy your vehicle and finance it in the same location, but there are more reasons to go to the dealership and get a loan through it.
Heuberger Motor's long-standing relationship with many banks in Colorado Springs, CO means we offer buyers a unique selection of financing options. Periodically, we will have the ability to offer special programs and give you low-rate deals that purely finance companies do not.
Things to Know Before Applying
You can do many things to get ready before you even arrive at our Colorado Springs Subaru dealership. First, do your research! It's important to know what your credit report looks like before looking at cars. Negative information, such as late payments, high balances on credit cards, or even errors you were not aware of can make it almost impossible to get credit for a car purchase. Not only that, but a poor credit score can raise the rates of your loan, which can make a vehicle you once thought was affordable way out of your price range.
After you get a clear view of what future creditors will be seeing on your report, you can estimate a price range. Check online and different car buying guides to look for vehicles that best match what you're looking for and your price range. If you have credit that needs work, or a tight budget, this step is crucial.
Be sure to look at all of the current finance rates being offered by dealerships, credit unions, and banks near you. One of the worst things a buyer can do is end up locked in an unrealistic finance plan because they are confused or feel pressured to make a decision. Being knowledgeable about what your options and limits are is the easiest way to combat this. While, ideally, everyone would finance through our dealership, we realize that's not always the case. We want our customers to be fully educated on their financial options before they visit us in person.
What is a Credit Score Used For?
A credit score is a number between 300-850, with a higher number meaning you are a low-risk borrower. This number is created by using the information in your credit report. It's used to show creditors, like financial institutions and banks, the risk or likelihood that a person will become delinquent and not pay their loans. The higher the number, the lower risk--and thus, the lower the interest rates. Likewise, if you have a low credit score, you are a high risk borrower, meaning your interest rates will be higher. The FICO score, graded between 300 and 850, is the most widely accepted, and is used by approximately 90 percent of money-lending institutions.
Your payment history makes up the majority of your credit score. This includes thinks like delinquencies on past loans and late payments. The amount you owe on your accounts and any other loans is also heavily weighed. How long you've had credit history, the different types of credit you've used, and the amount of new lines of credit you've opened recently also factor into your score, though they're less important than payment history. If you apply for and open many lines of credit in a short amount of time, it can lower your score, increasing your borrowing risk. All of these factors are calculated to create a unique score for everyone that shows their risk as a borrower.
Financing with Poor Credit
Financial history that isn't perfect seems easy to get and difficult to lose. Most information on your credit report stays there for seven years! This can cause problems when it comes time to make an important purchase, like a house or a car. Although it can be more tedious, not to mention time-consuming, it's possible to finance your new or used car with poor or very little credit.
To get started finding your financial options, you will need important paperwork, such as your valid driver's license, proof of residence, a recent pay stub, and a current phone bill. Using our online loan application, our financial experts at Heuberger Subaru can examine your credit history, work history, and current income to find the best rate for your new or used car purchase. We'll do as much as we can to get you the auto loan that's right for you.
Looking to re-establish your credit once you get your vehicle? Always make your loan payments on time. This will help you rebuild your credit and it makes you one step closer to owning your car!
Financing a Used Car
A lot of lenders, including banks, will normally require a down payment of 20%. This can sometimes make buying a brand-new car out of your price range. And if a buyer has credit challenges, they might have better luck with loans in the used-vehicle market. These cars are priced significantly lower than new cars, and even though they sometimes have a higher interest rate, the entire cost is lower. This means a better chance of being approved for a loan!
But remember, some vehicles that are more than seven years old might not qualify for financing. New cars can be financed for longer terms than used cars, too. It all makes sense: if you finance a five-year-old car for 66 months, you'll still be making monthly payments when the car is ten years old! By that point, the car will probably need a lot of maintenance, and it will no longer be a sound investment.
Here at Heuberger Motors, it's quick and simple to get approved for a car loan. We know how stressful and sometimes embarrassing past credit issues can be, but we're here to help our customers get through those situations. Contact us today to see how we can help you buy your next vehicle!
