Good Credit Auto Loans

Good credit auto loans are given to people with a good credit score. This means that the person must have a score of 660 or higher, be 18 years old or older, and have two on-time monthly payments in their credit history. There can be some exceptions for those with a bad credit score if they make sure that they are fully prepared to pay back their loan in full and on time before applying for one.

Auto loans can range from $4,000 to $25,000, depending on what type of car you choose to purchase with it. Interest rates vary depending on your situation and the amount you owe the bank at any time.

One thing you need to remember before going out and buying a car with a good credit auto loan is that the interest rate will not be the same as the one you will pay on any other type of loan. Aside from this, you also have to ensure that you have good credit. If you have bad credit and don’t know about it, then the bank won’t even consider a good credit auto loan.

Good credit is typically used for auto loans because it allows for higher interest rates and looser terms on the loan itself. It is also more likely that you will be approved for more expensive (and more reliable) cars than if you have a bad or no credit history.

But why is it important for you to have good credit?

Let’s look at it from a couple of different perspectives:

One – It makes life easier. If you do get a loan, it’s easier to get approved for. You won’t have to put up as much collateral and other restrictions, and hopefully, the interest rate will be lower. It also makes insurance more affordable since most providers only give out loans with good credit.

Two – It can make your car easier to sell in the future if you ever want to sell it. Not only will you get more money for it if you have good credit, but it will also be easier to sell because most lenders prefer that their loans be paid off before selling the car. This can save a lot of time and marketing money on your part, which translates into more money in your pocket.

Three – If you want to borrow other funds in the future, such as a home or business loan, having good credit (and especially no late payments) can increase the chances of getting approved. People with good credit are viewed much more favorably than those with bad credit.

What are the factors that determine a “good” credit rating?

The three main factors of a good credit rating are:

1. Being on time with your payments is the most important thing. Most car loans use a 15-day grace period after you make a payment before they report it as late. It is important to note that they don’t even have to be 15 days apart- if you pay at the end of day 14 and make another payment on day 16, those will both be considered late for reporting purposes.
2. Not having any late payments more than 60 days apart is also very important. Missing just one payment is not the end of the world; missing two late payments in a row can drastically affect your credit rating.
3. Also, if you are going to be late more than once before collections kick in, it can also hurt your credit rating. Larger companies will consider it a first late and report it at once, but smaller companies may consider that your problem with making payments is still a secret they don’t want to know about.

If you want to keep good credit history, don’t let your car payment go more than one day late.

What is the difference between good auto loans and bad auto loans?

Good credit loans are more likely to be approved with competitive interest rates and terms. Bad credit loans are more likely to be approved with significantly higher payments than those of a similar loan with the same terms and conditions.

Credit score requirements vary from lender to lender, but for most, a FICO score of around 700 would result in a $2000 difference in monthly payments for a $20,000 car loan between good and bad credit lenders. Bad credit auto loans are not as common, which is why they tend to be more expensive than good credit auto loans.

Many car buyers are unaware of the availability of bad credit auto loans or even need to look outside their local bank or credit union for financing. Many lenders won’t consider a loan application if your FICO score is below 640. Good credit auto loans are typically only available to those with good to excellent FICO scores, such as (but not limited to).

Bad credit auto loans are more likely available to those below 600. Lenders consider the length of credit history, whether or not the applicant has declared bankruptcy, and any late payments made in the past. Generally, someone with several late payments or a bankruptcy on their credit report will have a much more difficult time being approved than someone with no blemishes on their credit report.

What can I Qualify for with Good Credit Auto Loans?

Good Credit Auto loans can be used for any car, truck, or SUV commonly used in the country (including motorcycles).

The type of automobile being financed will come into play, as well as the documentation requirements at the time you apply. Applicants with moderate to poor credit scores may be able to qualify for a car loan up to $15,000, but those who have better credit scores may only qualify for a car loan up to $25,000.

Depending on the type of lender, the applicant’s income and debt-to-income ratio will also be considered. The rule of thumb is to keep your debt load less than two times your monthly income. If you are self-employed, it is best to provide recent tax returns, pay stubs, and a current credit report if you have any other outstanding debts.

The lender may also consider the applicant’s residence, criminal record, and insurance history, but usually only if there is a question about the applicant’s ability to repay the loan. A good credit score (640+ FICO) will typically allow applicants to borrow at a lower interest rate than someone with a lower FICO score or poor credit history. Verifiable income is needed for loans of more than $5,000. Some lenders will consider the applicant’s assets when determining eligibility and credit terms.

How to Improve your Good Credit Auto Loans?

There are several ways to improve your good credit auto loans. The first and most important is not to let any late payments get out of hand. As long as you pay the full amount of your car loan on time every month, your credit will stay in good standing for a longer period.

The next step is for you to have a good credit score. If you need help in this area, contact one of the many companies offering free FICO scores. They may be able to assist with your auto loan application before you even get it. They can even advise you on enhancing your rating before applying for a new car loan or refinancing existing loans.

After maintaining a good credit history and paying your car loan on time, you can begin looking for good auto loans. These are the best of the best and most competitive in terms of interest rates, terms, and payment amounts.

Find your credit condition by taking a free FICO auto loan score. Having a lower credit score than 680 will give you many options in finding the best possible car loan program for you. You should always remember that not all lenders will consider bad credit loans or even give them any consideration if your credit is less than mediocre.

If you have good credit, your options are much more extensive, and competition is higher. You may be able to lower your interest rate by 0.5% or more if you shop around for the best car loan program available.

Requirements to Apply for Good Credit Score Car Loan

• Applicants must be at least 18 years of age and legal residents of the United States.
• Employment and income information will be evaluated (self-employed applicants must submit tax returns, payroll stubs, and bank statements).
• Applicants must have an open, active checking account (savings accounts are acceptable as long as there is no overdraft/ NSF fee during the last 90 days).
• The loan amount must be at least $500 and not more than $15,000 (some banks and credit unions allow for higher amounts).
• The car must be new, used, or certified by a third party as an environmentally sound vehicle.

Some auto loans may have a pre-payment penalty, so it is important to understand how your payments are calculated. The pre-payment penalty can cost up to 10% of your outstanding balance.

All applicants will need to submit copies of their recent tax returns. If the applicant is self-employed, the applicant must submit a current W-2 form. All other applicants must submit either pay stubs for at least five consecutive months or a complete bank statement showing all outstanding balances (including credit cards, auto loans, and other debts) during the last 90 days.

Applicants must have a good credit score so the lender can approve their loans and also should have a current, active checking account to deposit each month’s car payment. All applicants must provide proof of income and the maximum available loan amount based on credit score.