Rebuild Your Credit Score with a Car Loan

If your credit score has taken a hit, taking out a car loan might not seem an obvious way to rebuild it. But a car loan is a great way to rebuild your credit score by giving you a credit mix with a long payment history of making regular monthly payments. Continue reading as we explain how a car loan can help you improve your credit score.

How is a Car Loan Different than a Regular Loan?

A car loan is a secured loan, meaning the lender has collateral against the loan if you default on your payments. Because there is less risk for the lender, secured loans are easier to get approved for and often offer lower interest rates than unsecured loans.

How Does a Car Loan Rebuild Your Credit?

By making your payments on time, you will improve your credit score. It is as simple as that. Your payment history makes up 35% of your credit score, and length of credit history accounts for another 15% of your score. Since most car loans are financed for three or more years, making your payments on time can dramatically improve your credit score.

Where to Get a Car Loan?

You can finance a car loan through a bank or a credit union, though they often have stricter lending requirements and aren’t likely to approve a loan if your credit score is under 630. If you aren’t sure what your credit score is, you can check your credit score right here on the Carloft site!

You can also secure a car loan through online lenders. However, these loans usually come with higher interest rates and payments.

Try a Car Dealership

Finally, you can apply for a loan through a car dealership, like Carloft. Applying for a car loan through a dealership is a quick and convenient way to apply for a car loan, as the dealership has preferred lenders to secure the best rates.

Finance with Carloft!

Carloft is Eastern Ontario's largest used car dealership and auto finance centre, with five convenient locations in Kingston, Cornwall, Napanee, Carleton Place, and Orléans/Ottawa. Whether you are in Kemptville, Brooke, Renfrew, Perth, Pembroke, or anywhere in between, we can help you rebuild your credit by getting you approved for a car loan. The knowledgeable professionals in our Finance Centre have years of experience assisting customers with various credit situations to get approved and will work with you to get you the best rates for your situation. Check out our extensive selection of quality used vehicles, then contact us to find out how to make one of them yours! We look forward to hearing from you!

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