What Credit Score Is Required for A Car Loan?
Cars are something that nearly all of us need to get to work, go to the grocery store or pick up the kids from school. However, automobiles, in general, have recently been edging onto the pricier side with vehicle prices hitting an all-time high in 2021 with the average car topping $40,000 for the first time according to CTV News.
This ever-increasing inflation in respect to automobiles is coupled with the fact that cars are still as essential as ever leaving people with the only option left of taking out credit for an automobile. Auto financing is a tool that allows you to take out money to purchase a new or used vehicle, these auto loans may offer fixed or variable interest rates and various payment options ranging from weekly to monthly payment plans at big lending institutions.
Maintaining Your Credit Score
A good credit score is a pillar of a financially stable account in today’s world. According to Statistics Canada, the household debt to disposable income ratio rose to 170.7% in the third quarter of 2020. Whether we like it or not, we rely on easy-to-access credit to finance our livelihoods. However, so do these businesses.
At the end of the day, you are a potential investment for lenders looking to hand out loans to you. In order to assess how safe of an investment you are (i.e. whether or not you’re worth investing in), lenders evaluate an individual based on their credit score.
Generally, a credit score ranges from 300 to 850. A score ranging from 580 to 670 is considered “fair”, from 670 to 740 is deemed “good”, 740 to 800 is considered “very good” and anything above 800 is “excellent”. Those with higher credit scores such as in the 700 to 850 range are more likely to receive various loans with flexible payment options and lower interest rates. On the other hand, those with lower credit scores (i.e. below 650) generally are less likely to be accepted for a loan by a big bank or will only be accepted for smaller amounts and with higher interest rates.
High Score, Big Profit
Several key factors go into determining an individual’s credit score. Keeping track of these and making sure you follow the guidelines and recommendations are your keys to ensuring easy, hassle-free finances for the future.
Payment History (35%)
Probably one of the most influential factors in deciding a person’s credit score is their payment history. A borrower that has paid back the previous loans they have taken out on time and in full are ones that lenders will have greater confidence in. This generally accounts for 35% of a person’s credit score.
Make sure to plan out your payments and organize them in fixed terms to ensure that you are always able to meet payment deadlines and that you only take out high interest loans if absolutely necessary.
Amounts Owed (30%)
In terms of open credit (i.e. lines of credit), an individual has the ability to borrow up to a certain limit. The closer a person approaches that limit, the more concerned a lender grows. It is recommended to keep your credit utilization under 30% in all lines of credit (i.e. your total amounts owed in respect to the available credit you have at your dispense).
New Credit (10%)
Lenders tend to look at how many accounts you've opened recently and if the percentage on these accounts is high compared to the total number, you might be at greater credit risk. This obviously doesn’t bode well for investors who are looking for safe, reliable investments. Making sure to close unnecessary accounts and to not take out high-interest loans unless absolutely necessary is key.
Still Not Enough? MagicalCredit Can Help
Even if you’ve gone through the criteria and tried your very best to follow them to a tee in order to improve your credit score, the big banks may still not accept you. This is because the rest of your credit score is impacted by factors largely outside of your control.
These include your credit history length as well as factors that don’t determine your credit score but may still impact your chances of loan approval such as employment history, marital status, and salary.
At Magical Credit, we understand the struggle for low and middle-class families in today’s world to get a reliable and affordable loan for those struggling with poor credit scores.
Perhaps you’ve run into a tough situation in the past that you’ve never been able to make up for or you made a mistake 10 years back that’s still weighing down on your credit score. We understand that past mistakes or struggles don’t define who you are today, that’s why MagicalCredit is here to help.
Reliable and Affordable Bad Credit Loans
Magical Credit is your local provider for bad credit personal loans. People with low credit scores may feel like they have no other choice other than to obtain credit from loan sharks who charge exorbitant interest rates. However, at MagicalCredit we’re interested in providing you with a manageable credit option so that you can pull yourself back up and get onto the road towards financial stability.
Your Centre for Car Loans
Magical Credit offers personal loans for practically any purpose ranging from dental expenses to legal fees, to unemployment loans without hesitation.
We are committed to providing our clientele with a comprehensive interface to allow anyone who deserves a loan to receive one. By visiting our website at www.magicalcredit.ca, we offer a short-term loan calculator which adjusts your payment periods and loan amount to determine your monthly, bi-weekly, or semi-monthly payment amounts.
We offer loans starting from $1500 to $20,000 with interest rates starting from 3.4% monthly with 12 to 60 month terms. All of this can be achieved by filling out the online application form which can be completed within 5 minutes. You can expect to receive an answer and funds deposited into your account within a 24 hour period.
Stable Finances and Large Prospects
Getting accepted for a bad credit loan by Magical Credit not only allows you the capital for your expenses; in this case, purchasing an automobile but is also very influential in promoting the factors that determine your credit score.
Getting approved for and paying off a personal loan from MagicalCredit improves your credit history, extending the length of your credit history as well as successful payment history. What this does is allow you to have an easier time in the future with loans as lenders become more willing to lend you money.
This is all thanks to Magical Credit’s user-friendly interface, affordable and comprehensive payment plans as well as fixed payments which make sure that you aren’t kept in the dark and are able to meet your payments. No hidden fees or interest hikes are involved.
If you’re interested in learning more about available car loans offered by MagicalCredit, visit our website to see how you can kill two birds with one stone by getting yourself that car and building your way towards a better financial future today.