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Credit Score, Car Loans, and You

Credit Score, Car Loans, and You

It’s easy to get confused when it comes to the world of credit, even credit specialists debate the best and worst ways to use it. At Summerside Toyota, we hope to help you answer questions like “does a car loan increase my credit score?” to help you be more responsible credit users and consumers.

There are many questions to consider when purchasing a new vehicle: “should I buy new or used?” “how much can I afford to spend?” “what do I absolutely need in a vehicle?” Working with bad credit adds even more questions like, “does a car loan help my credit score?” When you’re trying to build up your credit, save money, make an investment, or maybe make a larger purchase in the future, taking out a car loan could be a good way to help with bad credit.

Getting a car loan

If you’re able to pay for a vehicle in cash, it’s advisable to do that before taking out a loan. However, if that isn’t possible, you can build better credit with an installment loan for a car.

Whether you’re struggling to have a strong credit score or haven’t yet built a large enough credit history, an installment loan like a mortgage or car loan can get you started on the right path. It’s important for lenders to see consistent growth and improvement in your credit usage when you’re trying to build or maintain a strong credit score. Your credit score will improve when you make you car payments in full and on time.

Is an auto loan right for me?

Taking out an auto loan really depends on a person’s financial needs and capabilities. It’s important to weigh the pros and cons first, as it can impact your credit score.

It’s not recommended to take out a loan if you’ve already got strong credit, especially if you are able to make a payment comfortably without it. Installment loans like auto loans are helpful if you need to boost your credit when you really need it, but if you’re not confident in your ability to make payments on time, you might want to look into other options for rebuilding credit. For more information about building credit or obtaining a bad credit auto loan in Summerside, PEI, contact Summerside Toyota today.

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