If you are looking to make a large purchase such as a home, business, or a piece of land, you may be able to improve your credit with a car loan. By re establishing your credit with a car loan, potential lenders will see that you are reliable and that you can be trusted with a larger sum of money.
Doing something as simple as getting a car loan can help you with future larger purchases because it shows others that you are reliable. The reason why financing companies do not just look at the amount of money that you have in the bank when deciding whether or not to issue a loan is because possessing a large sum of money does not necessarily mean that you are good at making your payments on time. Even if you have the ability to pay for a new or used car with cash, you can show others that you are good for your word by getting a car loan and making all of your monthly payments on time. On time car payments will boost your credit score and improve your chances of approval for large purchases.
If you can be trusted to make smaller payments on time, banks and other financial institutions are more likely to trust you with paying larger sums of money on time. Financial institutions love financing large sums of money to trustworthy individuals because both parties benefit from the exchange. They want to help you achieve your dreams and they want your business because the interest helps their institution operate. However, because of the great risk involved with financing high cost purchases, they want to be sure that you have a good credit score and that you will pay them back. By re establishing your credit with a car loan, you can increase your chances of being approved for a home loan, business loan, or other larger loans.
If you have proven your ability to make payments on small sums of money, such as a car loan, you deserve to be trusted with financing for larger purchases. By re-establishing your credit with a car loan, you can achieve your dream of being approved for larger purchases.