Financing a Car while Rebuilding Your Credit

Financing a Car while Rebuilding Your Credit Faulkner Auto Group

If you’re trying to finance a car while rebuilding your credit, you’re in luck: Taking out an auto loan is actually a good way to improve your credit score. Read on to learn how Faulkner Auto Group can help you estimate your car payments and rebuild your credit with an auto loan in Harrisburg, Mechanicsburg, and Trevose, PA.

How Financing a Car Builds Credit

Luckily, financing a car is a great way to improve your credit score. First and foremost, it builds your credit history. Making your car payments on time every month shows lenders that you’re a trustworthy borrower, even if you’ve made mistakes in the past.

Additionally, an auto loan can improve your credit score by adding to your credit mix. If you’ve already opened or paid down the debt on a credit card, you’re on the right track. However, taking out a loan for a large purchase—such as an auto loan or a mortgage—will help you even more.

In fact, many people who take out a car loan can see improvements to their credit score in as little as six months.

Do Your Homework Before Car Shopping

Financing a Car while Rebuilding Your Credit Faulkner Auto GroupBefore you start shopping for that new car, there are a couple things you can do to prepare. If you don’t need to buy a car right away, check your credit report for any issues. If you see any mistakes, take a month or so to dispute them. At the same time, pay down any debts that are overdue or at risk to improve your credit score before you apply for a loan.

Then, take the time to work out a monthly budget. Find out how much money you’re able to set aside each month for a car payment. This extra step of planning can go far in helping ensure you take out a loan that you can easily manage with your financial situation.

If you have a current car you’re looking to get rid of, you can easily trade it in at our dealership and add its value to the down payment on your loan. Find out how much your car is worth at our dealer by filling out our quick and easy trade-in form.

Then, you can put your preferred monthly payment and down payment amount, plus an estimated interest rate, into our car finance calculator to find out what price range you should be looking at when you’re shopping for a car.

When You’re Ready to Shop

When you’re ready to start shopping around for a new car, keep this estimated car cost in mind. Many dealerships—including ours—have online inventories that make it easy to search for new or used cars by price.

Then, once you’ve selected an affordable vehicle and are ready to finance it, do a little homework on the finance approval process. Your credit report keeps track of every time you apply for a loan, and too many inquiries can decrease your credit score. Ask questions about each dealership’s loan approval process to prevent too many inquiries.

At the same time, make sure you’re borrowing from a lender that reports your payment history to the major credit bureaus. Luckily, many car dealers follow this practice. However, some private lenders don’t report your payments, which won’t help you rebuild your credit.

After Buying Your New Car

Financing a Car while Rebuilding Your Credit Faulkner Auto GroupOnce you’re all set, the most important thing to do is make sure you make your monthly car payments on time, every time. This will have the largest impact on your credit score.

If you’re able to make larger monthly payments, you’ll end up paying less in the long run because there will be less time for interest to accrue. However, decreasing your total debt doesn’t affect your credit score as much as on-time payments do. Therefore, you shouldn’t worry about paying extra each month if it means putting the rest of your finances at risk.

Over time, after your credit has improved, you can consider refinancing your loan to get a lower interest rate. This can decrease your monthly payments as well as the total amount of money you spend over the life of your loan.

Apply for Financing Today!

If you have questions about the financing process or need help estimating your car payments in Harrisburg, Mechanicsburg, or Trevose, contact the finance department at Faulkner Auto Group. We’re happy to help you finance a new or used car no matter where you are in the process of rebuilding your credit.

When you’re ready to take the next step, use our secure online form to apply for financing today!