It’s easy to get discouraged when buying a car, especially if you don’t have the best credit score. Don’t beat yourself up; there are ways for you to get approved for a car loan in Canada without having the best credit history. We’ll be bold and say; you can start right here, with us; we’re awesome at getting Canadians approved for an auto loan whether they have good credit or poor credit. Having a bad credit score doesn’t make you a bad person, and it’s not like you’re stuck with your current credit score for the rest of your life; there are ways to improve your credit rating.
We’ll never tell you lies, so we gotta be honest; unfortunately, having a low credit score does make it a bit more challenging to get a loan compared to if you have a good credit score. In most cases, a bad credit car loan does come with higher interest rates.
Getting a Car Loan
When it comes to auto financing, there are other factors than credit score that lenders take into consideration, such as your monthly income. Don’t give up if one lender says no; there are other car financing options available through different lenders. The major difference between a bad credit car loan and a traditional car loan is the lender and the interest rate.
Banks and credit unions are probably the hardest places for borrowers to get financing with poor credit. With that said, still talk to your bank, as they may take into consideration your personal relationship with them.
Car dealerships are the most common option for bad credit auto loans since they are motivated to sell vehicles, and therefore want to get everyone approved. Tread carefully here, as they may try and take advantage of your credit situation to increase the dealership’s profits.
Another option (which should be your last) is going with a private lender. If this is your only option, know that it is a much riskier one and you should do your research beforehand to ensure they are credible.
The Process
The process of getting a loan is the same whether you have good or bad credit. The lender will always do a credit check to make sure there aren’t any absolutely crazy things on your credit report and consider your financial situation as part of the loan application. Loan providers will also want to see your driver’s license and proof of income, in which case, a pay stub will suffice.
Here’s an option that is far less invasive than what a traditional car dealership will put you through. Get approved through our fancy technology. It takes two minutes and has zero impact on your credit score. Within minutes you will have loan terms, including the amount you qualify for, interest rates, and length of loan emailed right to you. There is also the option of getting a trade-in value of your vehicle and seeing what your monthly payments will be depending on that trade-in amount and if you have a down payment.
Increase Your Chances of Getting a Car Loan
If you don’t need a vehicle right away and your credit score is a work-in-progress, consider waiting and using that time to increase your chances of getting better loan terms. As part of rebuilding your credit, you’ll want to pay down your credit card and make sure you don’t miss a payment or make any late payments on bills.
It’s important to check your credit report every so often to see where you stand and what has been reported to the credit bureau. Often sites like Transunion or Equifax will offer discounts on a full credit history report.
Set a budget for your life, including a car loan. Part of having good financial health is having a budget and sticking to it. This includes looking at your income and putting it up against expenses that include rent or mortgage, groceries, gas, entertainment, and any other living expenses.
Knowing where you stand on all of your other finances will give you a better understanding of what loan amount you can afford for a new vehicle. Since you are most likely planning your budget based on monthly expenses, use a car loan calculator to help determine the cost of buying a new or used car, and it can break the payment down, as a monthly payment, bi-weekly, or weekly.
That leads us to our next tip. Calculate a new car versus a used vehicle. Buying brand new means the vehicle is in perfect working condition, whereas a used car may have some quirks about it. If you are going with a used car, buy from FFUN Cars where every vehicle comes with a free CARFAX report so you know everything about the vehicle’s history.
Read the fine print. It doesn’t matter what your personal finances are, whether you have great credit or not-so-great, always read the disclaimer and any fine print. The last thing you want is to get yourself in financial trouble because you didn’t do your due diligence.
If you have someone willing to be a co-signer, you may want to ask them. Having someone with a strong credit rating attached to your loan will make it easier to get approved and will have better terms.
We’re going to be upfront with you. We’re pretty sure you’ve been put through the wringer with traditional lenders and dealerships. We aren’t about that. We’ve made the car buying experience easy and convenient, no matter what your bank statements say or your credit report. It’s simple; get qualified, browse our inventory, shop online or in-store, and then be done and driving away in one hour or less. Not to mention, you can also enjoy a 24-hour test drive to make sure you really love it. To add to our amazing benefits, we offer a 30-day money-back guarantee. It’s car buying your way.
