Auto Loans and Your Credit
Auto Loans and Your Credit
At United Teletech Financial, we take pride in helping members buy vehicles. We know that you depend on your car to get to and from work, get your kids to school, and do everything you need to do in a day. Your vehicle is your freedom and your most practical tool.
When you apply for an auto loan with us, we’ll look at your credit score and history, which is something all lenders do. The higher your score and the more positive your history, the higher the chances that you’ll receive a loan in the amount you need at a good interest rate.
If you have less-than-stellar credit, don’t panic. Bad credit won’t necessarily prevent you from getting an auto loan. Let’s answer a few of the most common questions we get from UTF members about how their credit affects their ability to get a car loan.
Why Do Lenders Look at Credit Scores and Credit History When I Apply for an Auto Loan?
Lenders use credit history and scores to estimate the likelihood that you will repay the loan. For a lender, it’s riskier to lend money to someone who has a history of not paying things back. Lending is all about evaluating risk. If the lender makes too many risky loans that don’t get repaid, then the lender could eventually go out of business.
Can I Get a Car Loan With Bad Credit?
At UTF, we do offer auto loans to people whose credit isn’t perfect. Helping people in our community is part of our commitment as a credit union, and we know how badly people need cars.
Typically, people with low credit scores will receive loans with higher interest rates. Someone in the “subprime” credit range, which Experian defines as a score of 501 to 600, would need to pay a higher interest rate than someone with a credit score of 750. The reason for this is that the person with the lower score is viewed as a higher risk to miss payments.
Where Can I Get an Auto Loan With Poor Credit?
Auto loans are the bread and butter of credit unions. Credit unions are driven by the desire to help people. As non-profit institutions, credit unions are usually more willing than banks to lend to people with spotty credit histories. That’s because banks are driven purely by the desire to make a profit.
Does Getting Pre-Approved for a Car Loan Hurt My Credit?
Getting pre-approved can be a good way to show a car dealer that you have the buying power to make a purchase. Car loan pre-approval does trigger a “hard inquiry” on your credit report, which could knock your score a few points.
However, it’s only temporary; the effect only lasts a couple of months. And, according to Experian, if you shop around for a loan and this results in multiple hard inquiries, they are generally treated as only a single inquiry, as long as they occur within a 14-day window.
Apply for an Auto Loan Today
United Teletech Financial is ready to get you an auto loan that gets you on the road.