Toyota Financial

Understanding Credit

The Basics

What is Credit?

Unless you're paying cash for your Toyota upfront, another way to take one home is to finance the cost of it through the dealership and make monthly payments on it (financing or buying). Or, you can pay for the use of the vehicle over time (leasing). We have a Buy vs. Lease matrix featured in this section that can help explain the differences between financing or leasing.

Much like every decision you make, there are pros and cons to consider before you actually apply for credit. So, let's begin.
The Benefits of Good Credit
A good credit history can open many doors. Many big-ticket transactions (like cars) are done on credit. Using your credit to purchase or lease a car, purchase a new home, or purchase anything else can be convenient, and in many cases to your advantage. Credit is also commonly used to purchase everyday items such as groceries and that new jacket you've had your eye on.
The Costs
Credit is convenient, but it's not free. When creditors grant you credit, they give you financial flexibility. But there's a cost. Creditors charge a fee for that financial flexibility. Every creditor has a different way of charging you, too. So it's very important that you always review all the documents given to you and the terms of your credit before entering into an agreement with a creditor.
Rate Your Credit
Here's a guide to help determine your credit rating:
Rating Description
Excellent I have a long, established positive credit history.
Very Good I use my credit wisely and never miss a payment.
Good Been pretty responsible with my credit, but have a few late payments.
Fair I should have paid closer attention to my credit and paid my bills on time.
Poor I have credit issues. Big ones.
No Credit I don't have a credit history, but really want a Toyota.

Based on your answers, our payment estimator will provide you with an estimate of the rate you may receive through the dealership. However, these estimates are all based on averages, and they can at best only give you a ballpark figure. So while you'll have a good idea on how much you'll be paying, keep in mind as you enter the dealership that it's not the final word on your credit. Your Toyota dealer can help you figure out a plan that's right for you.

If you didn't rate very high on our credit test, don't give up just yet. The benefit to financing or leasing a Toyota through your dealer and Toyota Financial Services (TFS) is that we understand that not all credit is perfect. We've designed specific programs for qualified applicants with little or no credit experience. Check out our finance and lease programs for more details. These programs are available through your dealer and TFS.

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