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(ARA) - If you’re in the market for a new set of wheels, you need to know much more than the make and model of your dream car or truck. Whether you buy or lease, it’s important to walk into the dealership knowing your credit score and the interest rate you’re likely to receive. This information can help put you in the driver’s seat when negotiating a car loan.
One of the driving factors in determining loan interest rates is this three digit number ranging from 300 to 850 commonly known as your FICO credit score. Lenders frequently use this number as a benchmark to estimate their risk; if you’ll pay off your loans and whether you’ll pay on time. For today’s car shoppers, understanding your credit score and how lenders view your credit history can be indispensable in helping you negotiate the best deal possible.
With this in mind, here are few credit management tips to help car shoppers take control of the buying process:
Do Your Credit Homework
Understanding your credit is the first step in the car buying process. Equifax recommends that you get a copy of your credit report several times a year, especially before you approach a lender. This allows you to familiarize yourself with your credit history and ensure that the information on your file is up-to-date. Reviewing your credit report in advance enables you to address any outstanding balances and note late payments which could cost you money in interest charges. It pays to know.
Know Your Credit Score
In the world of car financing, educated consumers who know their FICO credit score are empowered to make more informed buying decisions. Higher scores typically signal a lower credit risk and can help position you for more favorable interest rates. Securing a lower annual percentage interest rate can save you thousands of dollars over the life of a loan.
Consumers can purchase their FICO score online through a number of resources, including equifax.com. Equifax is the only credit reporting company that allows consumers to see the average interest rates that are associated to credit score ranges for various loan packages. Through the Score Watch product, consumers can choose to view an auto loan, new or used with different repayment lengths. Knowing your score and interest rate that you could get will help save money and determine the best time to buy. Monitor Your Credit Status
Don’t wait -- be proactive and keep a close watch on your credit score. Continual credit monitoring will help keep you informed of any changes in your credit file. Tools such as Score Watch are designed to monitor and alert users when there is a meaningful change to their credit score that may affect an ideal interest rate. Consumers who take advantage of these credit management tools and do their credit homework will be well positioned to obtain the best loan rates relative to their financial situation.
Arm Yourself With the Same Information as Lenders
Take control of the car buying process by tapping into the same information that lenders use to determine if you qualify for a loan. Different lenders consider various factors when assessing if you qualify for a loan and at what interest rate. Even so, Score Watch can play a helpful role. With this tool, you can track your FICO score over time and set a target score for earning the best interest rate on an auto loan. This gives you the bargaining power you need when comparing lender rates and shopping around for the best deal.Courtesy of ARA Content