topic Re: Prevention question in Auto Loans

Prevention question

steelholder — Mon, 26 Mar 2018 15:01:10 GMT

Hello everyone I'm looking to get financed to purchase a cheap motorcycle around $5,000 total perhaps less. I vaguely read a horror story of someone who was approved for 0 APR and this somehow dinged their credit in a negative way. I'd like to prevent any negatives on my credit report obviously, from those who have been financed before is there anything to look out for? Thanks!

Re: Prevention question

Anonymous — Mon, 26 Mar 2018 23:44:29 GMT

@steelholderwrote:
Hello everyone I'm looking to get financed to purchase a cheap motorcycle around $5,000 total perhaps less. I vaguely read a horror story of someone who was approved for 0 APR and this somehow dinged their credit in a negative way. I'd like to prevent any negatives on my credit report obviously, from those who have been financed before is there anything to look out for? Thanks!

Reports will often see a 'ding' for any HP's pulled for applying as well as a possible 'ding' when the new loan reports. This is usually a small amount of points. Mileage will vary based on your current report based on loan mix, etc. For some folks without any installment loans, adding one can be a positive.

I dont think your friend had any negative information added because of a zero percent loan - adding a brand new loan and the number of inquriries it took to obtain that loan are likely why your friend's score saw a decrease. As the inquiries get older and the loan balance goes down, (assuming no other changes) the score would be expected to go back up.

Re: Prevention question

Kree — Tue, 27 Mar 2018 12:55:17 GMT

@Anonymouswrote:

@steelholderwrote:
Hello everyone I'm looking to get financed to purchase a cheap motorcycle around $5,000 total perhaps less. I vaguely read a horror story of someone who was approved for 0 APR and this somehow dinged their credit in a negative way. I'd like to prevent any negatives on my credit report obviously, from those who have been financed before is there anything to look out for? Thanks!

Reports will often see a 'ding' for any HP's pulled for applying as well as a possible 'ding' when the new loan reports. This is usually a small amount of points. Mileage will vary based on your current report based on loan mix, etc. For some folks without any installment loans, adding one can be a positive.

I dont think your friend had any negative information added because of a zero percent loan - adding a brand new loan and the number of inquriries it took to obtain that loan are likely why your friend's score saw a decrease. As the inquiries get older and the loan balance goes down, (assuming no other changes) the score would be expected to go back up.

Additionally, the aggregiate utilization of installment loans might have increased with the new loan reporting. This too could cause a point decrease.

Re: Prevention question

sccredit — Tue, 27 Mar 2018 19:26:12 GMT

Motorcycle financing is often done through what is basically a 0% credit card and is subject to the utilization calculation just like any credit card is. I assume that is what your friend meant.