http://bloomingtonford.com/page/auto-finance-dept/Bloomington-IN-Ford-LINCOLN-Dealer | Having bad or no credit can make purchasing a car on credit challenging. Many dealerships will work with individuals in this situation. Higher interest rates on car loans or leasing vehicles are the two main options open to those with questionable credit.

1. The Effects of Negative Credit on a Car Purchase and What to Do about It
Many people have to finance the purchase of a car. If the buyer has good credit, there are lots of great
financing options available. However, if the buyer has bad credit or no credit, it can be challenging to
secure financing. Most Bloomington car dealerships have financing options but bad credit can even
affect those.
What Is a Credit Score?
When a consumer applies for credit, such as for a car loan, the bank, credit bureau or other lending
institution looks at the applicant’s credit score. The credit score is a 3-digit number that is a summary
of the information stated on the buyer’s credit report. The score indicates the type of credit history
that individual has had and is used by lenders to determine the amount someone can borrow and how
likely it is that the loan will be repaid without struggle. Scores range between 300 and 850 on the FICO
system, the most commonly used rating system.
What Makes Up a Credit Score?
The credit report is made up of five critical components. They are:
● Payment History – This shows all credit payments reported and whether or not they were
reported as late payments. It accounts for 35 percent of the score.
● Amounts Owed – This shows all the existing credit debt the applicant has and makes up another
30 percent of the score.
● Length of Credit History – This shows how long the applicant has had debt and gives a clear
picture of the type of borrower someone is. It is about 15 percent of the score.
● New Credit – This shows recent attempts to secure credit and can indicate a problem if there are
too many attempts. It is about 10 percent of the score.
● Types of Credit Used – This shows the makeup of existing credit, i.e., loans, credit cards,
mortgages, etc. It is the final 10 percent of the score.
The Effects of Bad Credit
Bad or non-existent credit can have negative effects on future credit. Those with bad credit or who may
be unproven yet are more likely to get higher interest rates from Bloomington car dealerships and other
lenders. If the credit is really bad, the application could be denied completely.
Loans from Car Dealers
Many Bloomington car dealerships such as Bloomington Ford are eager for your business. Recent
years have been hard on the automobile industry and dealerships have had to get creative in order to
attract buyers. This often means they are willing to extend credit to those with less than stellar scores.
Interest rates may be higher than those with terrific credit but at least the loan is granted and it is a
chance to rebuild that credit score.

2. Leasing Options
Rather than buying the car, some people opt to lease a vehicle. With a lease, there are often no down
payments, only the first month's payment, a security deposit, the acquisition fee and other fees and
taxes. The vehicle does not belong to the lease and is normally returned to Bloomington car dealerships
at the end of the lease. Payments are comparable to or less than most finance payments and this option
can also help improve or establish credit.
Even with poor credit, there are options available. It is important to look at every financing option in
order to get the best deal, even with poor credit.