Auto Loan Interst Rate
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How a bad credit history affects the auto loan interst rate
According to the Experian National Score Index, the average U.S credit score stands at 677. This score, which is an indicator of your credit history, is used by auto lenders to determine whether they are willing to offer you a loan. It will also have an impact on the auto loan interst rate you are quoted. If you have a high credit score and a good credit history you will probably be offered a preferential auto loan rate, but what happens if you have a low credit score and a bad credit history?
If you have found it difficult to pay back your creditors in the past, this will show up on your credit history. It will list the number of late payments you have made, if you have defaulted on any loans, if you have any CCJ's against you or if you have had to declare bankruptcy. All of these factors, and more, will have a detrimental effect on your credit score and will actually cause it to decrease.
When you make an auto loan application, the auto lender will check your credit score to determine how credit worthy you are and what auto loan interst rate you qualify for. If you have a bad credit history then a number of eventualities can occur. Here is a summary of the results you may see:
As you can see, you can still get an auto loan, even with a bad credit history. Do not let your financial past stop you from making an auto loan application. Just make sure that you do your homework before you start applying. Its wise to check your credit score yourself, then check the variety of options open to you and only apply to one or maybe two companies who will accept you as a customer. Make sure they provide you with the term of loan and auto loan interst rate you can afford. If you make lots and lots of applications and are continually rejected this can lower your credit score too so be careful!