Taking out a car loan will help you build good credit.

Like many people, you may find you will need some added help financing your purchase of a new set of wheels.

Getting a loan will help you pay for the car upfront, while you pay the lender back in smaller increments, usually over the course of a few years. Your interest rate may depend on several things, including your credit score and income, but the average right now is about 5.04 percent for a three-year loan to buy a used car, according to Bankrate.

Once you nail down how much you can spend on a car and the terms of the loan, you can determine how much you can afford red car over a lot of stacked coinseach month. Be sure to cover all your bases in determining this amount, including:

  • Loan payments
  • Insurance fees
  • Registration costs
  • Gas
  • Maintenance, such as oil changes
  • Parking

Business Insider pointed out that first-time auto buyers can take this opportunity to begin building good credit.

Taking out a loan and paying it back consistently on time will help boost your credit score and give you an advantage next time you need to take out a loan, whether it’s for a new car or something else, like a mortgage.

However, if you fail to budget correctly and can’t make the loan payments every month, your credit can become damaged quickly, causing you more problems in the future.

This entry was posted in automotive, automotive articles, consumer information, tips & advice, Uncategorized and tagged , , , . Bookmark the permalink.

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