Why Get an Auto Loan? Credit Score Improvement

Even if you can afford to purchase your car directly it may make sense to get an auto loan to improve your credit score. Your credit score is calculated by a number of factors: length of credit history, the percentage of credit being used, history of making payments and the revolving loans you have paid off.

An auto loan is a revolving or installment loan. Mortgages, large electronic loans and student loans are other examples of revolving or installment loans. Auto loans are among the most common way to show you can make regular installments on a multi-thousand dollar loan. If you plan on purchasing a house or small business, your interest rate will be lower with good credit. You can save money over time on your loans by actively working to improve your credit score through an auto loan.

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