A new car often comes with a finance contract or lease. So it's important that you understand what your contract entails and how it will affect your financial picture. We're here to help. We'll provide basic information to help build your credit knowledge and strengthen your financial future.¹

What is credit?

Say you want to purchase or lease a car, but don't have enough money to pay for it all at once. Enter credit. Credit allows customers to take possession of something, in our case a vehicle, before it is fully paid. A financial institution extends credit for the item, on the expectation that payment will be completed in the future. With credit through Toyota Financial Services, you can either finance (make monthly payments on an amount borrowed to pay for the purchase) or lease (pay for the use of a vehicle for a set period of time plus any lease charges).

The benefits of good credit

Your credit score can be used as an indication of how likely you are to make your payments reliably and on time. So the better your credit is, the more likely you are to get the loan or lease you're hoping for at a good interest rate.

Your credit score is based on:

• How long you have had credit,
• How many different creditors you have,
• How many open lines of credit you have,
• Whether or not you make payments on time,
• Too much or too little activity in your accounts,
• The types of credit you have (e.g. credit cards, auto loans, mortgages, etc.),
• Your credit limit and how much of that limit you're using,
• And a number of other factors.

The costs of credit

Credit is convenient, but it's not free. Financial institutions and other creditors may charge a fee for letting you pay a little at a time for whatever you're financing or leasing. They'll collect those fees in different ways, from interest, to charges, to penalties, so it's crucial that you fully understand all the terms of any finance or lease contract.