Does a Car Loan Help My Credit?

Does a Car Loan Help My Credit?

You would have probably heard about how a car loan can actually help you in increasing your credit history. But, you must be wondering, ‘Does a car loan help my credit?’ Well, we will try to provide an answer for this question below. Yes, if you are trying to improve the credit health of yours, after facing a bankruptcy, or are just trying to get started as a borrower, taking car loans, and repayment of these loans can help in building up your credit score. Well, we give some details regarding the car credit, and how these are helpful:

Does a Car Loan Help My Credit? – Reasons

    • Auto loans are paid back in instalments. When the lenders and the credit bureaus check the credit history of a person, they like to see a good mix of revolving credit and instalment loans. The revolving loans include the home equity loans, and the credit cards. And, the instalment loans include the auto loans, mortgages, and the student loans. Auto loans is one of the easiest kind of loans, and you will be eligible for a good credit history.
    • Refinancing of auto loans is easy. If you are a borrower without credit history, you will have to pay the premium for the car loan. And, the interest rate could be high, too. But, after you make the payments on time, for about one or two years, you would be able to refinance the car loan at a lower rate of interest.
    • Flexible car loan repayments: Early payment of loans might invite penalties, but other than that, the car loan payments are quite flexible. And, if the monthly instalment for the car is low, you can also plan to make double payments, or extra payments, whenever you feel that you have the liquidity. When you are able to make the payments faster, it can reduce your interest burden, and can also help in boosting the credit score.

    These were some of the reasons for taking up a car loan. Hope these answers were satisfactory, and helped you in finding the answers for ‘Does a car loan help my credit?’ Taking a car loan is definitely a good and easy way for boosting the credit history. It is not only easy, but is also quite flexible and affordable. You can drive your way to a good credit history, by purchasing a car with car loans.

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