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Toy Barn Finance Department Used Cars
  Automobile Financing 101.   Credit Score
   

Wondering what determines financing terms you may receive from the lender?


Here are the factors:

Your credit score is the metric most lenders will use to determine your financial risk.  The better your credit score, the better your rate. Don’t know your credit score?  Get your free credit scores from one of the three credit reporting agencies: Equifax  Experian  TransUnion 
   
   
  Size of Down Payment
   
    Toy Barn Finance Department Used Cars        The larger the down payment you are able to make, the more favorable terms you are likely to be offered by the bank.  Therefore, if you can afford it, you are better off placing a larger down payment if it impacts your financing terms.
 
 
Ratio of Debt-to-Income
 
The debt-to-income ratio is the percentage of a consumer’s monthly gross income that goes towards paying debts.  This figure helps lenders determine the likelihood that you will be able to pay off your loan.  
 
 
Length of Loan
 
Shorter loan periods tend to have more favorable terms for the buyer because they are less risky for the bank.  Therefore, if you can afford it, you are better off having a shorter term loan.
   
   
  Age & Quality of the Vehicle
   
  In the event of default, the lender can repossess the vehicle. Lenders provide more favorable terms to higher quality vehicles because they can more effectively recoup losses.

 

Toy Barn Finance Department Used Cars