Auto Sales Credit

You want credit to finance an automobile. There are several options available to you, depending on your credit history, debt ratio, employment history, and length of residence.

Credit History

Your credit history is the single most important factor in obtaining vehicle financing. If you’ve built a solid credit history, you’ll be in the best possible position. You’ll obtain credit more easily and you’ll get the best loan rates. A credit score of 750 or higher is the most desirable, although you should be able to obtain traditional financing with a credit score of 650 or higher.

There is no quick fix when it comes to your credit score. Your score is a reflection of your history over the past 10 years, with higher emphasis placed on activity in the past 2 years. Don’t believe companies that claim they can fix your credit report quickly and easily. Real credit history and score change comes through months and years of financial responsibility.

Debt Ratio

Your debt ratio is the amount of debt you are currently carrying, in relation to your current income. Your debt ratio should never exceed 50%. For example, if you have $2,500 in monthly income and $1,000 in monthly debt, your debt ratio is 40%.

$2,500/$1,000 = 40%

The lower your debt ratio the better position you’ll be in to obtain the best loan rates. Only debt that is listed on your credit report is used to compute your debt ratio.

Employment History

Most lenders will require at least 6 months of continual employment history at the same job. Some lenders may require up to 2 years of employment history.

In the field of auto sales, special financing is sometimes extended to people with poor or subprime credit, but who have a solid employment history. So if you credit is poor having a good employment history may help you in obtaining credit. However, even if you do obtain credit, the rate you receive will be quite a bit higher.

Length at Residence

Prospective lenders want to make sure you’re not just going to take their money and run. Having a lengthy term of residence shows stability. Length at residence is less of a consideration for those who have a good credit score. You’ve shown that you pay your bills, so the lender is not as concerned with you skipping town.


There are several factors that contribute to obtaining auto financing. If you’ve built up a good credit history and have a low debt ratio you’ll be in the best possible position to get the lowest interest rate. For those who have less than perfect credit, employment history and length at residence can help you obtain credit, but you’ll likely pay a higher interest rate.

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