Before you start looking for a classic car, new or used car loan, JJ Best Banc and Company advises you to check your credit score and credit report and better understand the effect it has on your calculated car payment.
You can get your credit score for free from several online sites. The score may not be the exact same score a lender uses, but it will be close. Each of the three credit bureaus, TransUnion, Experian and Equifax are required on request to provide one free credit report each year.
“Look for any errors, outdated or false information, and dispute them. A quick way to improve your credit score to get a better interest rate/calculated car payment on a car loan – is to lower your credit utilization”, says Taylor, Loan Officer at JJ Best. “That is the ratio of your credit card balance to your available credit.” JJ Best Banc & Company processes many applicants per year and the less available credit you use, usually the better your score, so be sure to keep credit utilization below 30%. One quick and easy fix is to pay off your credit cards twice a month instead of at the end of your billing cycle.
Let’s see how your credit score affects the interest rate you’ll be charged and understand your calculated car payment. Let’s assume you’re buying a $20,000 car with a 20% down payment, so you need a $16,000 loan over four years.
Here is what the average car loan interest rate by credit score looks like and how it effects your calculated car payment:
Credit Score vs Loan Interest
| FICO Score | Interest (APR) | Monthly Payment | Total Interest Paid |
|---|---|---|---|
| 720-850 | 3.88% | $360 | $1,300 |
| 690-719 | 5.233% | $370 | $1,768 |
| 660-689 | 7.353% | $386 | $2,517 |
| 620-659 | 10.344% | $408 | $3,606 |
| 590-619 | 14.86% | $444 | $5,320 |
| 500-589 | 15.83% | $452 | $5,699 |
Source: myFICO
This demonstrates the impact your FICO Score, the most widely used credit score, has on your interest rate, monthly payment and total cost. The exact same car can cost thousands of dollars more --depending on your credit score.
Ready to Apply for a Car Loan?—Apply online at JJBEST.com or call your personal Loan Officer at 800-872-1965. We look forward to servicing you.
