Will Buying A New Car Hurt Your Credit Score?
29 Dec 2020
These days, almost everything relies on your credit score, be it your phone, TV, buying things or more. So it’s always important to look after your credit rating to make sure that you can get the things you need.
Because of this, a common worry people have when it comes to buying a new car is how it will affect their credit score. After all, the price of a new car is always going to be high, so it’s really common to get one on a finance deal. So that’s another concern for your credit score and how it will change.
So let’s take some time and look at whether buying a new car will hurt your credit score.
Buying A New Car On Finance
When it comes to buying a new car, there are two options; one is buying it outright with cash, and the other is to get it on a finance deal. That can either be a Hire Purchase contract or a loan from the bank.
The first option, if you have the cash available, won’t have any effect on your credit score as there is no change to your financial agreements. On the other hand, if you have to get a new car on finance, it will definitely go on your credit score history. So we will focus on that side of buying a car.
At the very beginning of the process, you will need to get a credit check carried out. If you fail a check and have to do another one, that will have a negative impact on your credit score.
From there, when you do get approved, the debt you get into will also be added to your credit report. So that’s important to note. Going forward, if you then miss any of the payments, that will put a mark on your credit score too.
So, in short, there are many ways that buying a new car can hurt your credit score. However, there is an alternative that could be safer for you.
Getting A Car On Lease Rather Than Standard Finance
Whilst getting a car on a lease deal will still involve a credit check, the total amount of credit required will be much smaller than trying to actually buy a new car. As such, there is a higher chance that you would pass the credit check, meaning you are less likely to get a negative mark on your credit score.
This also continues with the monthly payments, as they would be less than on a standard finance agreement. That would help you to ensure that you don’t miss payments too, so in the end, a car lease is a much safer option to get a new car without big risks for your credit score.
If you are looking for a new car, then a car lease deal like the ones listed here could be the best way to do it without risking your credit score. So why not take a look?
Because of this, a common worry people have when it comes to buying a new car is how it will affect their credit score. After all, the price of a new car is always going to be high, so it’s really common to get one on a finance deal. So that’s another concern for your credit score and how it will change.
So let’s take some time and look at whether buying a new car will hurt your credit score.
Buying A New Car On Finance
When it comes to buying a new car, there are two options; one is buying it outright with cash, and the other is to get it on a finance deal. That can either be a Hire Purchase contract or a loan from the bank.
The first option, if you have the cash available, won’t have any effect on your credit score as there is no change to your financial agreements. On the other hand, if you have to get a new car on finance, it will definitely go on your credit score history. So we will focus on that side of buying a car.
At the very beginning of the process, you will need to get a credit check carried out. If you fail a check and have to do another one, that will have a negative impact on your credit score.
From there, when you do get approved, the debt you get into will also be added to your credit report. So that’s important to note. Going forward, if you then miss any of the payments, that will put a mark on your credit score too.
So, in short, there are many ways that buying a new car can hurt your credit score. However, there is an alternative that could be safer for you.
Getting A Car On Lease Rather Than Standard Finance
Whilst getting a car on a lease deal will still involve a credit check, the total amount of credit required will be much smaller than trying to actually buy a new car. As such, there is a higher chance that you would pass the credit check, meaning you are less likely to get a negative mark on your credit score.
This also continues with the monthly payments, as they would be less than on a standard finance agreement. That would help you to ensure that you don’t miss payments too, so in the end, a car lease is a much safer option to get a new car without big risks for your credit score.
If you are looking for a new car, then a car lease deal like the ones listed here could be the best way to do it without risking your credit score. So why not take a look?