It’s no secret that your credit score can affect the interest rate you might receive on a car loan. And in some cases, it could impact your chances of getting a loan.
But the question is, what’s a “good credit rating” to get your hands on a low-rate car loan?
Well, it depends on the lender.
You may have heard of tiered interest rates for auto loans. This is where a car lender advertises a loan with a range of rates, with the lowest offer available to those with excellent credit and the highest for those with more credit. unhealthy. Although, for those with bad credit this is still reasonable, so remember that it is up to the lender whether or not to offer you a loan.
When you apply for a loan, the lender will assess your credit history and credit score, and may offer you a rate based on this assessment – this is called risk-based pricing.
Generally speaking, your credit score will be between 0 and 1000 or 1200 and the higher the better. Essentially, if you have a high credit score, it means your credit history shows you are less of a risk to potential lenders, which means you are more likely to get a low interest car loan. .
How can I check my credit rating?
Before applying for a car loan, it’s always a good idea to check your credit score.
According to moneysmart, every three months Australians are entitled to a free credit report from each of the three major credit reporting agencies in Australia: Equifax, Experian and Illion.
You can access it online, by email or mail, or by phone.
It is important to remember that each agency may hold different information, so it may be worth contacting them all to ensure you have all the information you need.
Can I get auto credit with bad credit?
Yes, you may be able.
While tiered rates may seem to favor car loan applicants with excellent credit, they can also benefit those with worse credit if a lender decides to offer them a rate.
In effect, it gives those customers the ability to borrow, when they may not have been able to borrow at all.
In other words, while you could face high rates on a car loan if you have an unhealthy credit score, that might be your only option…and at least the option is there. But in this case, you still need to assess whether you can actually afford the high rate and be able to repay the loan, rather than going into more debt.
It’s also important to keep in mind that keeping your credit score healthy or rebuilding it should be your top priority. So if you don’t really need to upgrade your car and can avoid taking out a loan for now, it might be worth the wait.
What auto loan options are currently available?
Well, it doesn’t matter if you have a good credit rating or not, here are some auto loans with tiered interest rates you might want to check out…
Tips to keep your credit score healthy
If you don’t currently have a good credit score or want to keep yours in top shape, here are some practical ways to increase or maintain your creditworthiness.
- Pay on time: From your credit card, loans, and even your electricity and internet bills, make sure you pay what you need when (or before) it’s due.
- Do not apply for several credit products at the same time: It’s not a good idea to apply for multiple loans or credit cards at the same time. Rather than giving you the best chance of being approved, it will actually look bad on your credit history.
- Keep it steady if you can: If possible, try to avoid shifting your job and where you live – lenders think favorably of stability.
- Make sure your credit history information is correct: The truth is, sometimes credit reporting agencies get it wrong, so the score you have on your report may not be accurate. Don’t be afraid to let these companies know if you find a mistake – it could cost you better rates!
Want to know more about your car loan options? Head over to our auto loan comparison page for more lenders, how-to guides, and all the latest news!
DISCLAIMER: The comparison rate combines the lender’s interest rate, fees and charges into one rate to show the true cost of a personal loan. The comparison rates displayed are calculated on the basis of a loan of $30,000 with a term of 5 years or a loan of $10,000 with a term of 3 years as indicated, on the basis of monthly principal and interest repayments, on a secured basis for secured and unsecured loans. basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and durations will result in different comparison rates. Costs such as withdrawal fees or prepayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may affect the cost of the loan.
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