Credit score is now the bottom-line of your future purchases. You might have come across advertisements that emphasize the importance of maintaining a healthy credit score. This call for a change in the way you manage your finances in such a way that purchases in future are not adversely affected by financial mis-management. The importance of credit score becomes more prominent when you shop for things that have huge financial implication, like buying a house or a car. When you buy car from a car dealer on credit, your credit score plays a significant part
.Currently the FICO score is used for credit rating. This is a number that ranges between 300 and 850 for individuals. The calculation takes into consideration the payments you make against your bills, any default you made against payments and whether you have filed for bankruptcy. A number above 700 is preferred by new car dealers as well as used car dealers. With this number you will get a better deal for an auto loan. A number lesser than this will still be eligible for a car loan, but the terms and conditions of the loan will be tougher with higher rate of interest.
Nowadays it is rare that anyone pays the car dealer in cash for payment against purchase of car. Most of the purchases now are backed by some kind of loan. Even the down payment is made through finance money. The monthly installment payment to car dealers too is done with the loan. It is therefore imperative that credit score should be within the preferred number so that getting finance to pay the car dealer is easy and smooth.
The rate of interest that you get and the length of loan will depend on the credit score you have. Therefore it is imperative that you monitor your credit score regularly. Some of the auto dealers have had bitter experience with loan defaults and hence insist on a credit score that is 700 and above.
It is not that credit score is the only criteria that determines whether you get a loan or not. Other matters like down payment, trade-ins, if any, income and the relationship you have with the auto dealer comes into play when you approach an auto dealer. Buyers, who latch on to a particular car dealer for their car every time, can take some advantages from the car dealer through hard negotiation. But negotiating becomes more persuasive if you keep your credit score at the desired level.
Therefore to extract the best deal from the car dealer you should be careful about maintaining you credit score