Auto Financing Basics | Tampa, FL

Your credit score is based on your credit history and is comprised of factors like the length of your credit history, your payment history, and how much you currently owe. Contrary to what you might think, a low credit score doesn’t mean you can’t qualify for a car loan. There are plenty of ways to finance a car, even with a bad credit score.

One way you can get a loan with a bad credit score is by financing directly through a dealership. When the dealer loans you the money rather than a bank or credit union, they can usually offer you more flexible options for qualifying for a loan and the length of the term. You can also shop for a loan through a bank or credit union, but they’re likely to make you jump through more hoops and may deny your request outright.

It’s important to understand the significance of any loan, including the pros and cons of both long-term and short-term agreements. Long-term loans, which you might pay back over five, six, or even seven years, are appealing because they come with lower monthly payments. But because you’re paying over a longer period of time, you’ll pay more interest over the duration of the loan.

Short-term loans, on the other hand, are typically paid back over just two to four years. They do have higher monthly payments, but you’ll pay less in the long run because you don’t run up as much interest.

The interest rate, or annual percentage rate (APR), of your loan is the amount of money a financial institution charges you for borrowing money from them. You want your APR to be as low as possible, as a high APR can keep you paying off your loan for a lot longer than you initially intended.