Does Buying a Car Hurt My Credit?

So you're thinking about getting a vehicle, but you're wondering, "Does buying a car hurt my credit?" With any kind of loan in the Edmonton and Leduc areas, including a loan you'll be putting towards financing a vehicle, there are some financial and credit-related considerations. Let's take a look at all of them, and whether or not there are actual costs involved...

Zero Financial Costs

The main thing to consider here is that whenever you take out a loan with any kind of lender, including your bank, credit union or a dealership like Go Auto Outlet, the lender wants reassurance that you'll be able to repay that loan in full, plus interest! But there isn't a lender on the planet that will ever make applying for a loan a difficult, costly process. The application itself is free; there are absolutely no upfront charges in applying for a loan. There are, however, some other considerations...

When you decide to apply for a loan through a lender, it's absolutely free. The process is simple:

  • You fill out the brief application form to the best of your ability
  • The form is completely confidential, between you and the lender, only
  • Enter in your personal information as required; you don't have to send a lender any information you don't want to send
  • Submit the form, and within 24 hours, you'll receive a response from the lender
  • There are zero charges for applying and speaking with a finance expert, like one from Go Finance!

Person using a calculator

A Possible "Cost" to Your Credit

Note that although there are zero charges throughout this process, there could be a credit-related cost: when your bank, credit union, lender or dealer is looking for a quote for you, they request a copy of your credit report along with your credit score from a credit bureau. There is no financial charge for this, but the process of pulling your credit report and credit score information could possibly affect your credit score slightly.

This is something to bring up with the lender. Any negative effect on your credit score is relatively negligible, but it's a "cost" nonetheless.

Interest on Your Loan

The only actual financial cost involved in a loan is the interest rate you'll be paying on that loan. This interest rate is determined by your credit score, and the higher that score is, the lower your interest rate will be. You'll definitely want to know what your credit score is because if it's low, then there might be some opportunities for you to improve your credit before taking out a loan. Improving your credit improves your chances of qualifying for a better interest rate!

If you're convinced you need a vehicle right away, then consider the fact that your current credit will directly affect your interest rate on a loan you receive in the Edmonton and Leduc areas.

An interest rate on a loan can vary, beginning from as low as 0%. A high interest rate could be considered 15%+, but it really does depend on what you're able to afford. To get the lowest interest rate possible, we suggest speaking with your bank or credit union before anyone else. These people know your finances better than anyone, and they can give you a quote too! But consider that this quote is non-negotiable, and that lenders and dealerships are able to negotiate with multiple financial institutions. This means these lenders, like Go Finance, can quite often secure a lower interest rate for you!

Person handing money to another

Clear Up Debt!

Also consider clearing up your debt before applying for more money. If you're paying off multiple loans at once, then you're incurring interest from multiple sources, which can push you further into debt. This can be a huge financial cost in the big picture. Speak with your bank or credit union about clearing up any debt or even about an account overdraft which would allow you to draw more money than you actually have out of your account, often at a reasonable interest rate.

Credit unions are often considerably less expensive to work with than banks are, but if you've been with your bank for a long while, then they'll likely want to work with you to retain your business. The Finance Experts in Edmonton and Leduc at Go Finance can help you with this too!

Simple as That

We hope you've found his article useful, and we hope your financial future is looking a bit clearer now that we've answered the question, "Does buying a car hurt my credit?" Remember the "cost" to your credit when a lender or financial institution pulls your credit information, and remember the financial costs of interest on your loan and any debt you're currently incurring. If you keep all these things in mind, then we're sure you'll be able to make sound financial decision for yourself, and we hope to be a part of that decision too here at Go Auto Outlet! We welcome you to contact the Go Finance experts to discuss your financial future...

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