For those who are looking to buy a new car, a credit check is a necessary step in the process. While some people think that this might help improve a credit store, the opposite is often true. It can actually be harmful to a credit score. For example, imagine you are shopping around to multiple dealerships for a good deal. As part of the process, each dealer runs your credit report, and their reporting system can make inquiries to 5-10 different banks at one time. Each “hit” can take up to ten points off your credit score, and will also stay on your report for up to two years. For example, suppose you buy a brand new car for $50,000, at an interest rate of 2.99% over 72 months (six years). Your monthly payment would be $683.51. This would appear on your report as a $45,000 loan ($50,000 minus $5000 down payment), or as utilizing 100% of a credit limit of $45,000. It is analogous to maxing out a credit card. The end result is the same – the bank would consider the borrower as unable to fully pay off the loan, and would thereby lower the borrower’s credit score.
For someone who is considering applying for both a home or business loan and an auto loan, it is important to get the home or business loan first, and the car loan later. This is because an auto loan on a credit report would give the lending institution a reason to reject a home or business loan.
Certainly, if you are interesting in taking out an auto loan in addition to a home or business loan, it can be frustrating, and the correct information can be difficult to obtain. However, I have a lot of experience and knowledge, and can help you with this often confusing and overwhelming process. Please feel free to ask for any assistance you may need. I am here to help you.
Contact Amazing Kim today and find out how he can help you get into the home of your dreams by filling out the contact form or calling (713)725-1703 now.