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.

Borrow with your car- Vehicle title loans

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!