What Is Auto Financing?

Bobb Says Yes! does offer Buy Here Pay Here options, but those are limited and impractical for many. That’s where auto financing comes in.
So, what exactly is auto financing? Financing a vehicle means you are borrowing money in order to purchase it. By doing so, you are entering into an agreement contract to repay the amount you have borrowed, plus interest and financing charges if they apply. This is typically done by making monthly payments. The amount of your monthly payment is determined by the total amount you are financing. This amount may be lower if you make a down payment. The monthly payment also varies depending on the annual percentage rate (APR) and the number of months you have to pay off your loan (the repayment term).

Banks determine who gets financed, and they also set your interest rate based on your application information. It’s all done through a formula that we help put together, so while it’s ultimately the bank’s decision, we fight for you. We have relationships with national and local banks and auto lenders, and we offer a variety of financing services from our single location, so there’s no need to shop. Your preferred bank or credit union may also offer options for purchasing a vehicle. If you prefer to pay for your vehicle with cash or a credit card through Buy Here Pay Here, contact us for more information.

Good Credit vs. Bad Credit. What’s the Deal?

Credit can be confusing, so let’s make it simple. There are many types of credit scores, but the most commonly used ones when assessing a loan applicant are FICO and VantageScore. Credit scores range from 300 to 850, and they are used to determine the lending risk, such as when financing a vehicle. The typical scale for all types of credit generally works like this

CREDIT SCORE CHART

Bad Poor Fair Good Great
300-599 600-649 650-699 700-749 750- 850

A variety of factors determine where you fall on the credit scale.

Another thing that is considered when you apply for financing is your credit report. This is a more detailed version of your credit history than your credit score alone provides, and it is generally made up of data from the three main credit reporting agencies (Experian, TransUnion, and Equifax). This can include your payment history for open and closed accounts, hard inquiries on your credit (how many loans and credit cards you’ve applied for in a certain amount of time), collections on your account, and settlements you owe. The better your credit report, the more likely it is that you have a high credit score.

Good credit means:

-Consistent and timely payment history
-Low debt
-Long credit history

Bad credit means:

-Late payments
-High debt
-Short or inconsistent credit history

Different lenders look for different scores and reports when approving a loan, but lower credit scores and inconsistent payment histories may limit your options. Banks and lenders ultimately make the decision, not us. They have a formula to determine if they’ll loan, how much they’ll loan, and what the monthly payments and interest rate will be. This formula consists of four main considerations:

• Application information (time at residence, length of employment at current job, etc.)
• Credit history (payment history and score)
• The vehicle (year, make, model, value, and price)
• Down payment

Credit can be one of the biggest hurdles to overcome when trying to get a used car, but we’ve got you. We understand that bad credit happens, and we aim to help you get what you’re looking for without judgment. Our job is to fight on your behalf to get you the financing you need to drive the car you want. Through our relationships with lenders and the best credit specialists in the state, we can handle just about any situation.

If you’re not ready to apply for financing just yet but you want to check your credit score, use our Bobb Says Yes! Auto Credit Approval Tool. It’s always free, and won’t damage your credit.

Why Are Financing Options Are Different Everywhere You Go.

Even though the banks use a formula, the dealership relationship also plays a part. Not all dealers have the same options because they don’t meet certain criteria. At Bobb Says Yes!, we meet criteria that some others don’t.

• Relationships—We have built close relationships with banks and lenders that allow us to work for you and get you financed. We play a role in the bank’s decision, and we’re on your side.
• Longevity—We opened our doors in 1924, and for more than 90 years we’ve kept Ohio driving.
• Experience—We work with people of all credit scores, and we have a variety of financing options. We know the best way to assist you in getting the vehicle you want and need based on your situation.
• Inventory— We have one of the largest inventories of quality used cars and trucks in the state of Ohio, and a variety of vehicle financing options.

How an Auto Loan Can Actually Improve Your Credit

A car is an exciting purchase. Whether your daily demands make having a car a necessity or you just want something newer and different, buying a car adds convenience to your life and the freedom to go where you want, when you want. For most car buyers, an auto loan is a big part of the process. It’s common and understandable for those with bad credit to worry they won’t qualify, or that it’ll negatively impact their credit further. But that isn’t often the case! Different lenders look for different scores and factors, and with Bobb Automotive there’s someone fighting in your corner to help get you the car you need. But did you know that an auto loan can actually give your credit a boost? Here’s how.

Credit mixing can improve your score:

The term “credit mixing” refers to the types of accounts in your name that make up your credit report. Most people have at least one credit card, and that’s considered a revolving debt account. Another common type of credit is called an installment account. An installment account is a loan that has a fixed payment amount for a fixed period of time. These can include student loans, mortgages, and—of course—auto loans. If you don’t currently have another type of installment account, taking out an auto loan will add a new type of credit to your report and can improve your overall score. In fact, it is estimated that approximately 10% of your FICO score is determined by credit mixing. Therefore, it’s possible that simply opening an auto loan account may increase your overall credit score.

It’s an opportunity to improve your payment history:

Late payments happen sometimes. With the ups and downs of the economy and the job market, it’s not uncommon for people to find themselves in a tight spot now and again. Unfortunately, late payments can lower your score and raise flags on your credit report. But you can turn this around! Once you are approved for an auto loan, making consistent and timely payments can raise your score and improve your credit report’s payment history. Payment history generally has the biggest impact on your credit score, which means the credit boost you get from staying current on your loan can be a significant one. You may then even be able to refinance your vehicle with a better rate once your score has improved. Or, if you find yourself unable to make your car payments on time, you may be able to refinance to avoid a negative payment history.

If your car search is a short one, it may not affect your credit much:

As you start to search more seriously for a vehicle, you may find yourself worrying that having multiple lenders run a credit check will negatively impact your score. This is a reasonable concern since credit checks of this type are considered hard inquiries. Hard inquiries, when done often with multiple lenders, can impact your credit for the worse. However, generally, inquiries that are all for the same loan type (in this case, an auto loan) and are within a 30-day period are likely to be counted as just one hard inquiry on your FICO score. This is good news, since this usually gives you a little wiggle room to shop around. But keep in mind, it’s a pretty short window, so try to keep your car search short. You can check your credit for free without it affecting your score, and doing so will give you an idea of what you’re working with before you need to have an actual lender run a credit check. Our finance specialists can help you figure out a likely range for your rates based on this score, though the actual rate can vary depending on the lender once you apply.
Bad credit doesn’t have to prevent you from getting the car you need. Once you are approved, not only can you get back on the road, you can also get back on the road to better credit.

Cash or Auto Loan: How to Make Your Car Purchase

Once you decide on the vehicle you want, you’ll have to determine the best way for you to make your purchase. There’s no right way to pay, just what’s right for you. Here are some things to consider.

  • If you buy with cash: The main appeal of paying with cash is that you won’t have to make monthly payments. Buying a car outright means you owe nothing on it, other than the usual regularly occurring costs for oil changes, insurance, registration, etc. However, this is money that you will no longer have on hand for other investments, large purchases, or emergencies, so it’s important to consider whether this is in your best interest in the long run. You also may not be able to buy the car you want most if you don’t have the full balance for it available and on-hand at the time of purchase. We do offer Buy Here Pay Here, so contact us for more information if you think this is the right option for you

 

  • If you finance: Though this method does come with monthly payments, you will not have to spend a large sum of money upfront as you would if you were to pay with cash. This means, if your loan application is approved, you may be able to get a better car or one more in line with your needs and wants. You pay for it in fixed amounts over time, so it’s more easily affordable month to month. An auto loan also gives you an opportunity to improve your credit score with timely, consistent payments. If you feel that this is the right option for you, you can get started with our quick and easy application. One of our expert finance specialists will contact you promptly to make sure you get the help and attention you deserve.

Still not sure? Stop by to see us! Our friendly and knowledgeable sales team will be happy to assist you. Happy hunting!