When planning to buy a new car or truck, or to apply for a personal loan, you need to understand the impact of your credit score. There are many lenders out there and they all want to help you buy the car or truck you want. However, they want to limit or minimize their risk exposure. That is why every applicant has to go through a credit check. To get affordable loans according to Truck Finance Online, you will need to have a decent credit score.


The Effect of Your Credit Score on Car or Truck Finance


i) Interest Rates

Your credit score has a direct effect on the rate of interest you will pay on car or truck finance. A higher credit score means that you not only have the ability to repay the loan, but also a history of repaying loans without default. Therefore, any decent lender will offer you low-interest car or truck financing.


– You can pay an APR as low as 2.58% on a new car if you have a credit score in the range of 781-850. With the same credit score, you can buy a used car or truck with an APR as low as 3.68%. This means that if you have super prime credit, you can save money by purchasing a new truck or car.

– If you have prime credit (661-780), you can get financing for a new truck or car at an interest of 3.64% APR. If you wish to purchase a used car or truck, you will have to pay an interest rate of 5.35% APR.

– Nonprime borrowers (601-660) can pay an APR of 6.32% and 9.77% for new and used cars or trucks respectively.

– Subprime borrowers (501-600) can pay 9.92% to 15.91% APR for new and used vehicles respectively.

– Deep subprime borrowers (300-500) have to pay between 12.99% to 19.85% APR for new and used vehicles respectively.

As you can see, interest rates increase considerably as the credit score of the borrower reduces. While superprime consumers pay as little as 2.58% APR for new cars and trucks, deep subprime consumers pay as much as 19.85% APR for used cars and trucks. Therefore, consumers should work on improving their credit to ensure they save money on interest payments.


ii) Down Payment

If you have a prime or subprime credit score, consider bringing on board a bigger down payment. This is because you want to put the lender at ease knowing that you have more to lose in case you fail to service the loan. In fact, most auto financiers usually demand a bigger down payment from borrowers who have a poor credit history. On the other hand, superprime and prime consumers can buy brand new vehicles with no down payment and pay as little as 2.5% APR on the auto loan.


iii) Repayment Period

A poor credit score simply means that you cannot be trusted with  money. When financing your car or truck, therefore, most lenders will want to get back their money quickly, so they may offer a shorter repayment period. This means that you may have to make bigger monthly payments to offset the loan within the loan term provided by the financier.


iv) Loan Requirements

Borrowers with a superprime credit can walk into an auto dealership and drive off with the car or truck they want without being asked too many questions. If you have bad credit, however, you may need to provide a guarantee, offer collateral and pay a bigger down payment just to get car or truck finance. The loan requirements increase as the credit score of the borrower reduces.


How to Boost Your Credit

As you can see, it is in your best interest to have a high credit score. You can build your score by taking multiple loans and servicing them without default. Each of the borrowed and settled loans will be reported to consumer credit reporting agencies, boosting your score as a result. There are also credit repair agencies that can help you build your credit to ensure you can access affordable loans and asset financing.


Buying a Truck or Car Online

Technology has made life and commerce much easier as consumers can procure goods and services conveniently from the comfort of their home. It is possible, nowadays, to apply for auto finance online. Just find the right lender and submit your application. Be sure to shop around to ensure you choose a lender with the lowest rate of interest and simple loan requirements.


Obviously, you will need to search for the perfect vehicle for your unique needs, whether personal or business. You’ll have to negotiate the price and terms of the sale. A signed sale agreement and copy of the title to the vehicle will also be required. These are some of the documents that must be uploaded when applying for auto finance online. Depending on the level of financing offered by the financier, you will need to pay the seller a deposit. For instance, if the firm offers 95% financing, you will need to pay the 5% to the seller and provide proof of payment before the loan can be processed. Once processed, the financier will settle the outstanding balance and you can take ownership of the vehicle.