Your Car Financing Questions, Answered
Jan 2025
When buying a car, understanding your financing options can make all the difference. Whether exploring innovative payment solutions like the MFC Step-Up Payment Option or improving your credit score before applying for a loan, having the correct information is key.
In this FAQ, we answer the most common questions about payment structures, credit scores, and how to make informed financial decisions. From managing cash flow to boosting your creditworthiness, we’ve got you covered.
The MFC Step Payment Option allows borrowers to pay lower payments at the beginning of their loan term, which gradually increases over time. The advantage of the Step Payment Plan is that there is no balloon payment, and instalments increase annually.
Borrowers begin with lower monthly payments, followed by incremental increases, until they reach a consistent payment amount.
Key benefits to the step payment plan include improved cash flow management, flexibility, encouragement for growth, better financial planning, and increased accessibility.
It’s ideal for new graduates, startups, and individuals with variable income.
Lower initial payments allow borrowers to allocate funds to other obligations or investments.
Yes, the step payment plan can help businesses reinvest profits during their early stages.
Assess expected future income, financial stability, and growth potential.
Availability varies by lender and loan type.
Predictable increases allow for better financial planning and budgeting.
Consult the financial institution or a financial advisor.
A credit score is a numerical representation of creditworthiness used by lenders.
Lenders use credit scores to determine the likelihood of loan repayment.
Ranges include Excellent (760-850), Good (700-759), Fair (640-699), Poor (500-639), Very Poor (300-499).
Higher scores (760+) have the best chances, while lower scores (below 700) face more difficulty.
Yes, very low scores (below 600) may result in loan application rejection.
Steps like paying bills on time and reducing debt can help improve scores.
No, lenders may have varying credit score thresholds and policies.
Options include secured loans, co-signed loans, or lenders specialising in bad credit financing.
Borrowers can obtain credit reports and scores from credit bureaus or financial services.
Yes, regular monitoring can help identify and address issues before applying.
