If you have little to no credit history, one way to build and improve your credit standing is by financing a car. However, there are a few things to consider before doing this.
Since your credit history is short, you may be considered a high-risk borrower. Because of this, you could end up with a higher interest rate. To counteract this, save up as much money as you can for a down payment, so your overall loan term will be shorter and your monthly payments will be lower.
Shop around for your loan to find the best rate possible. You can apply with your personal bank or credit union or even apply here at Crown Motor Company.
If you’re having trouble finding a loan with terms that meet your needs, consider getting a co-signer. This is a trusted friend or family member with good credit. Their credit score will work together with yours to help you get a better rate. However, if you default on your payments, they will end up being the responsible party, so make sure you are financially stable enough for this decision.
Once you have your loan (and your car), make sure you make each monthly payment on time. Late payments can have a big negative effect on your credit. In addition, consider paying more than the monthly minimum to save on interest and pay off your loan faster.
After doing all of this, the next time you need a new car, you will find it much easier, and you’ll be in a much better place with your credit.