A car for most Canadians is a necessity, public transit is not able to cover all areas of Canada efficiently. If you need a car for work or just to do normal day-to-day activities, you need to get an auto loan.
Car prices have gone up in the last couple of years
Car prices are on the rise and you will need to determine how much you can afford. The first and most important thing that prospective auto lenders focus on is your credit score. Credit scores range from 300-900, you can access your score by visiting Transunion or Equifax, there is no charge for this service.
If your score is over 650, you stand a fair chance of getting a competitive interest rate. What we recommend if you have time is to work on increasing your credit score. The most common reason that your credit score is low is due to a lack of consistent payment history. If you’re score is lower than 650, don you’ll still be able to get a car loan with poor credit, there’s just a few more steps.
To avoid missing payments, set up reminders on your phone so you will always pay your bills on time. After a few months of paying your bills on time, your credit score will start to improve. It would be smart to keep your total credit utilization at 30% or lower. The more debt you are carrying, the riskier you can appear to prospective lenders.
Locating lenders that specialize in bruised credit auto loans
You may be able to find lenders online but the vast majority of bruised credit auto lenders work directly with car dealerships. There should be used car dealerships advertising in your city or your county at the very least.
These lenders understand that people can experience hard times, especially since the pandemic hit. The lenders are giving you a chance to get a car loan with poor credit which will let you rebuild your credit albeit they have to charge higher rates of interest to mitigate the risks.
These lenders will need to understand why your credit score is low, you should be honest with them. Also, the lender will want to know whether you have a stable income to repay the car loan and all of your other financial obligations.
If your income is sporadic, bring your income tax notice assessment and bank statements for the last 6 months. Don’t worry if you don’t have the printed versions of your banking statements, you can just log into your online banking account and access your statements from there.
Selecting the right used car
When you have your auto loan approved, you can begin looking at the various used cars that are available. Check out the reviews that were posted by people who are driving the same make and model of the car you want to buy. Select the car that has the largest number of positive reviews and buy that one.
Long term goals
The auto loan you currently have will be high interest, so focus on paying your bills and one year from now your credit score will be high enough to refinance your car loan. This strategy of refinancing car loans after one year of solid repayments works well and will help you save money over the long term.
For those of you who know that you are seeking a car loan with poor credit, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!
For any questions or concerns, please don’t hesitate to contact us here!