How Fixing Your Credit Score Can Save You $8,500
Did you know that your credit score can be the most expensive cost factor when buying a car?
The difference in cost between an excellent credit score and a poor credit score on a 60-month car loan is nearly $8,500!
Most car shoppers spend the majority of their time trying to negotiate the price of the car and spend hardly any time trying to improve their credit score.
This is fine if you have an excellent credit score, but if you have bad credit, you should focus nearly all of your time on fixing your credit score.
Let's take a look at the interest rates you can qualify for with different credit scores.
The following is for a $20,000 car loan with a 60-month term:
|Credit Score||Interest Rate||Monthly Payment||Total Interest Cost|
As you can see, someone with a credit score ranging from 720 to 850 can expect to pay only $2,520 in interest over the life of the loan.
Someone with a credit score below 589 can expect to pay 4 times more: $10,984!
These are seriously large differences in cost and hopefully you now realize how important your credit score is when getting auto financing.
Your first step is knowing what your own credit score is. You can check it at FreeCreditScore.com
My Recommendation for Car ShoppersTrueCar No-Haggle, CarsDirect, and NADAGuides are the quickest way to see the lowest car prices in your area. These sites show you no-haggle prices from dealers closest to you - and the deals are usually really good. This should be the first step you take when negotiating your car price. Follow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan
Each week, I'll keep you up-to-date on the latest car deals and news that might affect your purchase. This includes...
- Best Rebates, Incentives, and Lease Deals
- Latest Car Buying Scams and Tricks
- The Best & Worst Time to Buy a Car
- Which Cars You Should Avoid