Financing, in laymen’s terms, is taking out a loan. Unlike leasing a car, in which you have to return the car at the end of the lease, when you decide to finance a car, you are actually buying the car. However, it is the bank that is buying the car for you. The bank is obligated to first check your finance credit, and if your credit score meet the requirements, the bank will then ask you to pay back the money usually through monthly installments. Hence, with a poor finance credit, your chances of getting an approval are low.
If you have a bad finance credit score, then that means the option to lease a car is almost certainly out of the way. You see, if you are one of those people that like to try out a car for a few months and then switch to another one, leasing would be the best way to go. Unfortunately, a bad credit score will seriously affect the interest rate you get, and if your credit score is seriously horrible, you might not even qualify to lease a car. On the other hand, you do have the option to finance a car (through a bank or dealership), but even so, your bad credit score will almost certainly get in the way.
Your credit score is what a lender would look at before he decides to finance whatever it is you want. Normally, you would want the score to be at least 680. Your finance credit score is calculated from a number of factors including how much money you previously borrowed, how long it took you to pay back the money, and even what your attitude was like in repaying the borrowed money. Before you decide to finance your car, it is highly recommended that you try and improve your credit score. Avoid anything that could hurt your credit score, such as not paying back the loan to begin with, or paying late, or defaulting on a previous loan. There are a handful of companies that do advertise that they have the best deals for people with a bad credit score, but they usually make use of fancy words and make you think it is the best option for you, and before you know it, you are bound to a contract you wish you weren’t. Indeed it sounds great to be the sole owner of the vehicle if you opt to finance your car, but in actuality, that won’t happen until you pay the very last monthly installment. You never know what condition the car will be in by the time it’s finally yours, and the maintenance costs then would become even more difficult to pay for.
Tips and comments
A smarter decision is always to save up enough money to purchase the car. If that seems highly likely in the recent future, then at least save up enough so you can make a large down payment; this way you will have to pay less interest on the car. Remember though, whether you decide to finance your car through a bank, or a dealership, regardless of how little down payment they ask for, they will always find a way to make you pay the money you thought you