Are you considering on taking an auto loan?
If you’re working on improving your credit after a bankruptcy or just starting out as a borrower, making car payments on an auto loan is a great way to establish or building your credit score.
Before you make that big decision of taking out a huge mortgage or business loan, you would need to prove to the lenders that you are creditworthy when it comes to repayments and car loans help you do that with the following reasons:
- Car loan refinances are easy. If you are a borrower with a bad credit or has no credit history at all, you will need to pay a premium on your first car loan. Don’t be surprised if you get a double digit car loan interest rate, moreso if you’re just coming out of bankruptcy. The good news is, after one or two years of making your payments on time, you can refinance for a lower interest rate if your credit score has improved. This is only applicable if you haven’t done anything to negatively impact it.
- Car loans are installment loans. At the time where lenders and credit report bureaus are looking at your credit history, they’d want to see a good mix of revolving credit and installment loans. Revolving loans include home equity loans and credit cards while installment loans include mortgages, auto loans and student loans. In most cases, it is not advisable to take out student loan, home equity loan or home mortgage simply just to build credit. It’s a whole lot easier to qualify and pay off an auto loan, which makes it the best option for improving your credit health.
- Car repayments are flexible. Car payments are flexible as long as you avoid loans with early payment penalties. When you get a low monthly car payment, you can opt to make extra payments whenever you have some additional cash. Paying off your loan early not only saves you money on interest, but it also helps you boost your credit score. You can also opt to put a large down payment from the start or when you refinance to get a lower interest rate.
Just make sure that if you want to get your credit rate in shape, that you will not miss out on a payment. This will pull down your credit score and will make the situation harder for you if you wish to be in favorable terms for your next loan.
Searching for the best car loan that suits your needs? If you need a quick repayment, low interest rates or a rapid payout – Norweigen car loans will be able to find the one that offer that you need best. You can go and discover how the loan calculator and the website is a combination of a great bargain and see how easily it is to apply for a car loan through our website!