Auto Financing & Auto Loans FAQ
Financing your next vehicle is one of the most important steps of the car-buying process. That’s why it’s important to have as much information about it as you can. Learn more about your credit score, how financing a vehicle works, and much more below.
How Do I Figure Out My Credit Score?
It’s very important to know your credit score. Thankfully, there are several ways to figure out what yours is. One of the most common ways is through a credit bureau. However, hard inquiries like these can lower your credit score. So, your best bet is to use free online credit estimators like the one that we provide right on our website.
Does Leasing a Car Affect Your Debt-to-Income Ratio?
Yes, leasing a car can affect your debt-to-income ratio. Your debt-to-income ratio is how many loans you have and how large your outstanding balances are compared to how much you earn per month or per year. Your debt-to-income ratio can be affected by a car lease because the remaining balance of your car lease will show up on your credit report as debt.
Say you pay $200 a month on your car lease and still have 10 months left. A debt of $2,000 will show up on your credit report. Even though you haven’t technically taken out a loan, you’re still obligated to pay that to the dealership as per your contract.
How Does Used Car Financing Work?
Used car financing works very similarly to how new car financing works. You have two choices – buy or lease. You can either take out a loan from a lender to pay for the car in full or you can pay for it up-front with cash. Though, the latter option will likely take you a bit longer to do.
As for leasing, you’ll need to pick a vehicle that’s made by an automaker that allows used car leasing. Then, you’ll have to find a dealership that allows used car leasing. This leasing process is the same as it would be if you were leasing a new car.
Can I Trade In a Car with Negative Equity?
Yes, you can trade in a car with negative equity. This won’t eliminate the negative equity – it’ll simply roll the balance onto your new car loan. However, this will enable you to get a new car when you need one even if you’re upside down on your current car loan.