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      June 23, 2018

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How Your Auto Loan Can Be Affected By Your Credit Rating

Our lives are dominated by numbers. As students, grade-point averages were the numbers which ruled our lives. In the working world, the success or failure of any business is determined by the financial bottom line are you in the red or the black? As individuals, numbers fill our lives, too. What is our bank account balance? What is the interest rate on our loans and credit cards? All of these numbers, when put together, can affect everything we do.

Take, for example, a very important number: credit rating.

A credit rating is part of your credit portfolio. Every financial decision a person has ever made, from their first credit card to their student loans, are part of the report. Any missed payments a person has ever had also are part of the report and can have a negative effect on any future financial dealings.

There are three credit reporting agencies in the United States: Equifax, Experian and TransUnion. These companies collect financial data on individuals, and then use a mathematical algorithm formula, developed by FICO, to generate a number between 300 and 850. A high, three-digit credit score indicates the person is of solid financial standing and is considered low-risk. Individuals who have credit ratings under 500 are considered high risk for loans and other financial dealings.

FICO also groups lenders together based on their overall financial history. Lenders who occasionally get behind on their bills are classified in a separate category from chronic late-payers. Prior to 2009, anyone who failed to pay on any loan whether it was an occasional issue or a chronic one was lumped together by FICO, creating an unfair credit rating for some individuals. With the changes, it helps those who have fallen behind a few times to still be able to achieve fair dealings with creditors.

However, for those chronic late payers, one of the areas which can be affected by a poor credit rating is an auto loan.

Unless you are lucky enough to have enough savings to pay cash for a vehicle and most people do not then chances are you will need to take out a loan to finance it. The new way FICO calculates its credit scores has a tremendous impact on the auto loan industry. People with only one major credit account in delinquency are likely to still have a good chance to get a fair interest rate on a loan. However, borrowers with a history of delinquent accounts will find themselves being either completely denied for a loan, or saddled with an extremely high interest rate.

A FICO score of 720-850 guarantees an annual percentage rate of no more than 6.3 percent, while those in the bottom tier of 500-589 can expect an interest rate as high as 18.5 percent. Borrowers whose credit score falls below 500 will likely be denied any kind of auto loan, even one with an extremely-high interest rate.

If you are in the market for an auto loan, the best course of action is to request your credit report and a copy of your credit score so you are aware of whether you may have difficulty in obtaining a loan. Individuals are permitted one free credit report from each of the three credit-reporting agencies annually. However, credit scores are not included and must be purchased separately.

3 Tips for Getting a Car Loan That Won't Kill Your Financial Future

Getting a car loan isn't great for your finances because you have to pay interest on an asset that's depreciating in value from the moment you drive it off the lot. Expensive car payments can also make accomplishing other goals harder. Still, despite the ...

Published:  Fri, 22 Jun 2018 14:47:00 GMT



Pink-slip car loans: Quick cash, high price tag

Carlos Smith needed rent money while he was between construction jobs, so he tapped his biggest asset - a paid-off 2008 GMC Sierra Denali pickup truck. He pledged it to a storefront lender as collateral for a $4,000 "auto-title loan" with a 70 ...

Published:  Thu, 21 Jun 2018 19:00:00 GMT



The Best Ways to Finance Auto Repair Shop Equipment

Auto repair shops steadily see a rise in business with the average fleet age at seventeen years old and the average age of personal vehicles at eleven years. Whether you are starting an auto repair shop or trying to grow one you already own, you need ...

Published:  Thu, 21 Jun 2018 18:23:00 GMT



Vehicle finance takes center stage on Auto Remarketing Podcast

In preparation for the launch of the Auto Fin Journal, this week we are featuring a pair of auto finance-related interviews recorded by AFJ senior editor Nick Zulovich during AFSA's Vehicle Finance Conference earlier this year. Launching this summer to ...

Published:  Thu, 21 Jun 2018 07:23:00 GMT



CarFinance.com Car Loans: 2018 Review

CarFinance.com is a direct lender offering new and used car purchase loans, as well as auto loan refinancing. The lender provides fast preapproval decisions and loans to those who might not get financing from other sources. CarFinance.com is a good fit for ...

Published:  Tue, 19 Jun 2018 13:23:00 GMT



Trump greets EU trade reprisals with threat of steep auto tariff

Trump wrote. A month ago, the administration launched a probe into whether auto imports pose a national security threat. The United States currently imposes a 2.5 percent tariff on imported passenger cars from the European Union and a 25 percent tariff on ...

Published:  Fri, 22 Jun 2018 14:32:00 GMT



Napa's Loan Ranger Chris Salese: Pump the brakes on auto financing

Before I get started, I want to be clear. The intent behind this column headline isn't to discourage you from making a new vehicle purchase this summer nor to suggest that you procrastinate on signing an incredible deal on a lease agreement either.

Published:  Wed, 20 Jun 2018 14:15:00 GMT



Deutsche Bank Partners With Allianz & Auto1 to Launch Car Financing Platform "Auto1 FinTech"

Deutsche Bank announced on Tuesday it has teamed up with Allianz and Auto1 to launch a new fintech called "Auto1 FinTech," which will offer financing and insurance products to automobile dealerships buying and selling used vehicles via Auto1.

Published:  Tue, 19 Jun 2018 12:53:00 GMT



Elon Musk talks about robots all the time, but nobody else in the auto industry does - here's why (TSLA)

They might not be trying to replace all human workers with robots - in fact, efforts to do so have been unsuccessful, and car companies have learned their lessons -but they're familiar with what automation can achieve. So they treat it as a given.

Published:  Fri, 22 Jun 2018 14:04:00 GMT



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