Buying a car is one of the main desires of Brazilians. However, many people looking for a car to call their own encounter a series of difficulties, often financial. Contrary to what many people think and believe, financing a vehicle with a low credit score is something possible to achieve. But how does it work?

As you know, credit scores play an important role in the car buying process. This is because most people buy vehicles through financing. In today's article, we'll show you that yes, it's possible to finance a vehicle with a low credit score and realize your dream of owning your own car. Let's go! 

A credit score is a rating that people receive from SPC Brasil and Serasa Experian. Both companies specialize in credit assessment and use a range of factors to classify and understand the risk of lending money to people in Brazil. 

Credit scores range from 0 to 1000 points, where 0 is the worst result and 1000 the best possible. Therefore, a low credit score automatically means it is very risky to lend money to that person. In these cases, it is common for banks and financial institutions to refuse financing or charge higher interest rates to compensate for the risk. 

A high credit score gives a person a better chance of securing proper car financing. Therefore, banks and financial institutions tend to approve financing more easily. 

Before financing a vehicle with a low credit score, it's important to understand how this index is calculated. In fact, it's done differently. SPC Brasil uses one formula and database, while Serasa Experian performs the calculation in a distinct way. 

However, there are common factors for calculating the score in both institutions. These are:

In addition to this information, institutions use other data to calculate the score. Salary, the region where the person lives, and how many people live in the house are also factors taken into account when formulating the score. In general, companies use all possible data about people's financial lives to calculate the score. 

Although many may not understand it, a credit score is important and represents a double safeguard for both the financial institution and the person wishing to finance a vehicle with a low score. 

Imagine this situation: a friend you trust comes to you and introduces you to an acquaintance. Your friend says that the acquaintance wants to buy a car for R$ 10,000 but needs to borrow the total amount to make the purchase. Your friend says that the acquaintance will pay the entire amount in 10 months, paying R$ 1,000 per month. Would you lend the money? 

What if the acquaintance doesn't have a job and can't afford to pay the R$ 1000 per month? What if they have a poor track record of paying their debts? All of this weighs heavily when deciding whether or not to lend them the money. 

With banks, the story is exactly the same! The financial institution needs a system that allows it to assess the risk of lending money to people. This system exists and is called a credit score. That's why it's so important when financing a car. It's not absurd to say that the credit score is one of the main factors in whether or not a bank or finance company approves your car loan. 

As we have shown, the score is an index that ranges from 0 to 1000 points. According to information provided by banks and other financial institutions, the ideal score for financing a vehicle is at least 700 points, because scores below 700 points are considered low. 

Right now, the question you're probably asking yourself is: how can I finance a vehicle with a low credit score? After all, after discovering that credit score analysis is one of the main factors in approving or denying financing, it's common to wonder if there's any way to get around this metric!

We'll now show you how to perform this dribble in a simple and extremely effective way. 

This is the most effective way to finance a vehicle with a low credit score. The guarantee can be a down payment, such as around 20 to 30% of the total value of the vehicle to be financed; or it can be the offer of some asset as a down payment, such as an older car or a motorcycle of more modest value. By providing this guarantee, the financial institution feels more secure about the fulfillment and payment of subsequent installments. 

A good relationship is also important for those who want to finance a vehicle with a low credit score, as it increases the chances of loan approval. A good way to maintain a good relationship with the finance company is to always use the same institution when seeking financing. And more than that: it's necessary to honor payment deadlines. This good relationship becomes almost like a "friend" to the client when it comes to getting their financing approved. 

You are your main guarantor. Keep that in mind. Therefore, another important factor is having your accounts and payments up to date at the time of the loan application. This automatically helps to compensate for a lower score. However, it's important to know that even with the possibilities of remedying a low score as we have just shown, there are other factors that can prevent you from getting the loan. 

Besides a low credit score, there are other situations that can lead to the denial of a vehicle financing request. 

Anyone with a negative credit history at credit protection agencies, such as Serasa or SPC, due to some debt incurred, will have a very difficult time getting their loan application approved. This situation will show any financial institution that it is impossible to be a good payer and fulfill all agreed-upon payments. 

Besides having a negative credit history due to debts, a loan application can also be denied if the name is wrongfully added to a credit blacklist. Unfortunately, having a negative credit history without having debts is relatively common. This happens when the company makes the mistake of registering the CPF (Brazilian taxpayer ID) with credit protection agencies, and as a result, the loan may be denied. 

Now, if you already have a loan but can't wait to pay it off, see if it's really worth it in the content below!