How Lenders Decide on Loan Terms

The finance specialists at Volkswagen of Clarksville are extremely knowledgeable and prepared to help you secure best-rate financing. We take the time to learn about your budget, and deliver financing options that will help you purchase a VW that’s right for your needs.

To help customers in the Clarksville and Louisville areas prepare for the financing process, it’s useful to examine what information lenders use to determine auto loan approval. There are several factors, including:

1. Down Payment: The amount of your down payment is a critical factor in securing more attractive financing options and ensuring pre-approval. Your trade-in can also help cover or add to your down payment amount.
2. Credit History: Your credit score and 12-month payment history help lenders better understand the risk. In general, better credit scores and histories increase the chance for approval. Our team works with borrowers with all types of credit histories.
3. Value of Vehicle: The purchase price of your vehicle is another factor that lenders consider, as well as the year, model and mileage of the vehicle.
4. Personal Finances: Financial data like monthly income, employment history and whether you own or rent your home are a few personal factors that can affect loan approval status.

Credit History and Auto Financing

How does your credit score affect the auto loan offers that are available to you? Lenders examine customers’ credit scores and histories to determine the risk involved in approving a loan. In effect, a better credit score helps borrowers secure more attractive loan offers, including lower APRs and lower monthly payments.

The financial specialists at Volkswagen of Clarksville helps customers review their credit histories during the financing process. Your credit score is determined based on a variety of factors:

1. Debt-to-Income Ratio:The amount of debt you hold compared to monthly income affects your credit score.
2. Payment History:Missed or late payments negatively impact your credit score.
3. Age of Credit History:A longer term credit history can positively impact your credit score. Yet, this is a minor factor. People with no credit history or new credit history can still be approved for loans.
4. Credit Utilization:The balance of your accounts in relation to the account’s credit limit affects credit score. In general, higher utilization negatively impacts score.
5. Open Accounts: The number of accounts you have open and the type of accounts are also used to determine credit score.

How Your Payments Are Affected