Are you considering a Volkswagen financing plan from Heritage Volkswagen Parkville? If so, you may be wondering if it will have an impact on your credit score. Here at Heritage Volkswagen Parkville, our team of knowledgeable finance representatives is happy to share information about the relationship between car loans and credit scores.
The Relationship Between Auto Financing and Credit
The short answer to the question is, yes, but don’t worry. Any time you apply for a loan, including a car loan through Heritage Volkswagen of Parkville, your credit score will take a slight hit. This is due to the lender performing a hard inquiry on your credit report, which signals that you’re ready to take on new debt.
The Long-Term Impact
While the short-term effect of a new car loan is a slight dip, the long-term effect is determined by your behavior during the loan. The most significant factor impacting your credit score after financing is your payment history.
Making on-time payments consistently will improve your credit score over time. On the other hand, missed or late payments can hurt your score.
How to Improve Your Credit
Because your credit score is one of the biggest factors going into your loan approval and interest rate, following these credit tips can be helpful:
- Pre-Qualify: Before applying for a Volkswagen loan, get pre-qualified at our dealership. This involves a soft credit inquiry and will give you an idea of your loan term and interest rate.
- Set a Budget: Make a realistic budget for your vehicle purchase, taking into account your monthly income and expenses.
- Make Timely Payments: On existing loans or credit accounts, set up automatic payments or reminders to ensure that you never miss a payment due date.
Learn More About Volkswagen Financing at Heritage Volkswagen Parkville
Here at Heritage Volkswagen Parkville, our friendly and knowledgeable finance staff is ready to find a loan that works for your personal financial situation. Stop in today to check out our inventory of Volkswagen sedans, coupes, and SUVs.
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Finance