Three ways to improve your credit with your next car loan

October 11 2022 -

Your credit report is more than just a number, it is the number one resource used by financial institutions to determine the conditions of a loan that you are looking to get for either a new vehicle, a home, or a range of other products you are looking to finance. Therefore, your credit directly impacts your wallet and having a poor credit score means that you will be paying more interest charges. Therefore, improving your credit should be something that you strive for if your credit score isn't where you want it to be. The good news is that when you do business with reputable dealerships who have your best interests at heart, it is possible to purchase a vehicle even with poor credit but more importantly, it is also possible to improve your credit thanks to your car loan.

Here are three ways that getting a personalized and customized car loan can help improve your bad credit score and make future financing more affordable for you.

Make sure your car loan fits your budget

This is certainly the most appropriate and effective way to improve your credit with a car loan. By making sure that the loan payments fit your budget, you will ensure that you can pay every month and that you do not register any late payments on your credit score. Showing that you can meet your financial obligations on a regular basis will have a direct positive impact on your credit score. Therefore, make sure that you calculate your budget well when buying your next vehicle and make sure that you take into account other fees and costs that come with owning a vehicle. In simple terms, you want to leave some room in your budget for expected expenses such as gas, insurance, and maintenance, and unexpected expenses such as repairs or a flat tire.

Make sure you purchase a reliable and dependable vehicle

Speaking of unexpected costs, make sure that you buy a quality vehicle. Doing so means that you will have less repair costs and less unexpected costs which can prevent you from making a payment or at the very least accrue on your credit card. You don't want to have a sudden and unexpected repair cost that you can't afford and that you have to pay using credit. Making sure you buy a quality vehicle will help you you save money and therefore improve your credit over time.

Give yourself a chance to pay off the loan before another significant purchase

If you would like to make a significant purchase in four or five years such as a house, try to find a loan that can be paid off in 4 to 5 years. The length can vary, but the idea is that if you want to improve your credit over the short or medium term, one of the best ways to do so is to make all of your payments during that period and then pay off your loan at the end. This will not only improve your credit score, but it will also improve your borrowing capacity.

Our goal is not only to help you get the vehicle you want, but also to help improve your finances and credit score over time. That is why we have such an enviable reputation in Nova Scotia. Give us a call today to learn more.

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