How Financing Your Car Can Help Your Credit Score

When it comes to purchasing a car, most people don’t want to buy a car they can’t afford. They want to try and get the best interest rate and be able to calculate their monthly payments. If you've had bruised, bad credit, no credit or no previous history with car loans, an auto loan (and personal loans) will be tougher to get but they can also help you build your credit.

Consumers should do their homework on how financing is determined. Auto financing depends on a number of factors and understanding each will get you a better deal. The rates are affected by the applicant’s age, down payment, type of vehicle, length of the contract and their credit score. If you do not have any credit history, you may need a co-signer. This will allow you to obtain the car you want, the loan you need and help build your credit. Keep in mind that not making your monthly payments will not only destroy your credit but also the credit of your co-signer.

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The prime benefits to your credit score doesn't come from paying off the loan itself but from the payment history of the loan and the management of debt that your credit report will show. Paying off a loan does a great service to your future borrowing power. Every time you make a payment on a debt that is not over 30 days late, you will receive a positive note for that payment of your credit report. Paying off your loan is a great accomplishment and of course will not hurt your credit but the monthly payments itself boost your credit report as it accounts for 35% of your score.

Credit history counts for 15% of your overall credit score so you will be able to benefit from your loan simply because of the age of your account. The older the account gets, the more it helps build a positive past credit history.

A vehicle is a big commitment but a strong financial stepping stone. Maintaining the vehicle and making timely payments will save you money in both the short and long runs by reducing the costs and repairs and building a strong credit history.

The economic downturn has negatively impacted auto sales but a consumer can benefit from this because dealers are offering incentives and great leasing options such as no interest financing in order to get a sale. Visit Prudent Value Cars inventory at http://www.prudentvaluecars.com to find the right car for you and the financing you need!

Car Loans versus Car Leases

To lease a car or to buy a car is a common question when thinking about purchasing a vehicle. This is not a question that can be answered yes or no as it really does depend on the situation and preference of each individual. Leasing and buying are two different finance methods, one is the financing of using the vehicle and the other is the financing of buying the vehicle. Here are just a few differences to consider before making your decision:

Car Mileage – This is the biggest drawback of leasing a vehicle. Most leases allow usage of 20,000 – 24,000 kms/per year and should you exceed the limit, it will cost you quite a bit of money. You can always negotiate a higher mileage limit but your monthly payment will increase. When you purchase the vehicle there is no limit however the higher your mileage, the lower your cars trade in or resale value will be.

Monthly Car Payments – Your monthly car payments with a lease are lower than the monthly car loan payments and this is because you’re only paying for the vehicles depreciation, interest, taxes and fees and at the end of the lease, there is the option to return the car or buy it out. With a car loan, you’re monthly payments are higher as you’re paying for the purchase of the vehicle plus the finance charges, taxes and fees but at the end of your loan, the vehicle is yours to keep and you will no longer have any monthly car payments. You must decide if it’s more important for you to pay off your vehicle and be debt free for a while even if this means having higher monthly car payments?

Wear and Tear – Most car leases have limits for the wear and tear of the vehicle during the lease term. Upon returning the vehicle, if you have exceeded the limit, you will be charged. When you buy the car there are of course no limits or charges for excessive wear and tear, however, similar to the car mileage this will lower the trade in or resale value.

There are many more factors that you should research. If you want a newer car, not new but a good used car then it may make more sense to save up for that. If you start to pay yourself monthly for a year then at the end of the year, you may just have enough to purchase yourself a reliable used car that you can pay in full and you’ll be left to absolutely no monthly car payments.

For more valuable information visit www.prudentvaluecars.com