If you want to get finance for your new car, one thing you will need to consider is your credit score.
Whenever you apply for credit of any kind, your credit score will be important because this is one of the factors that lenders use to decide whether to offer you a loan.
So what does your credit score have to be to get car finance?
No Defined Score Is Required
The first thing to know is that there is no defined score that you will need to have if you want to apply for car finance.
The truth is, all lenders are different and they will have different requirements. If you apply to one lender, they may require a high credit score before they will lend to you, while another lender may not require a high score.
That’s why it’s always a good idea to look around and compare lenders before you decide on one.
Some Lenders Are Suitable for People with Bad Credit Scores
If you have a very low credit score, this does not mean you cannot get car finance. Many lenders may be happy to provide you with a loan for your car even if you have a low credit score or even if you don’t yet have a credit score.
So if you know that your credit record is not great, it may be worth looking into these lenders first.
How a Low Score Affects Your Application
If you have a low credit score, this will usually impact your application. One of the ways that it may have an impact is that you may not be able to get the best rates of interest.
If you have a very good score, you are seen as less of a risk, which means you may be able to get a loan with a lower rate of interest.
Also, lenders may want some more information about your situation, such as details about your job and income.
They will often use a range of factors to decide whether to approve your application, and they do not just look at your credit score.
A Higher Credit Score Will Always Help
While there is no defined credit score that you need to get car finance, it’s worth remembering that a higher score always helps.
If you have a higher score, you are seen as less risky for lenders, and this may open up the door for more loans at better rates of interest
If your score is currently low, you may want to try and improve it, but this is not usually something you can do quickly.
You may want to take out a credit card and pay it off in full every month, which can help to improve your score over time.
Also, don’t forget that when you get car finance, making your payments on time every month will help to improve your score.
That way, by the time you are ready to look for a new car loan, your credit score may be higher and you may be able to get a loan with a lower rate of interest.