If you’re looking to buy a new (to you) vehicle, but are worried your credit score is too low, fear not. we are going to show you how to get approved for a car loan with bad credit in 2022. You will need to do some legwork but it will be worth your time.
What is your credit score?
The first thing you need to look at is your credit score? Bad credit can mean different things to different people, if your credit score is 680 or higher then you are considered to have good credit. 620-680 is considered fair and anything below 620 is considered subprime.
There are two major credit reporting agencies in Canada, Equifax, and TransUnion, you will need to check your score with both of them because they each have their own proprietary credit scoring system. You could have a 680 with TransUnion and a 650 with Equifax, since most lenders use both credit reporting agencies, you need to know your scores.
Simple to follow credit rebuilding tips
Since you are looking over your credit reports, you should take this opportunity to look for ways to repair your credit. One of the most common reasons that your credit score is low is missed payments. Your payment history has a profound impact on your credit score, even missing just one payment can drag your score way down.
Once you have found the accounts that are weighing down your credit score, you need to pay them as soon as possible. After the payments are brought up to date, it will take a month or so before your credit score will start to rise and eventually go into prime range.
The importance of having a stable income
Prospective lenders may be willing to overlook your credit issues if you have a stable income. Lenders want to know how much money you are earning and then using a debt-to-income ratio calculation determine what is the maximum monthly payment you can afford.
While having a good income will help increase your chances of getting the car loan approved, you will be required to pay a high rate of interest.
How to find a lender that will approve you even with terrible credit
If you have solid income but terrible credit, all is not over. You will be able to get approved for a car loan with bad credit but not from any of the lenders you find online.
You will need to head over to your local car dealership and get their expert help. The dealership is going to first look over your credit and show you what steps need to be taken so your credit score will rise.
While working on repairing your credit, the dealership will know which lenders are going to approve your car loan. The interest rate as mentioned is going to be higher but you will be able to refinance the car loan to a much lower rate after your credit score has reached the 680 threshold.
Now that you know how to get a car loan with bad credit, it would be a smart move to visit your local dealership before the shortage of new and used cars gets worse.
For those of you who know that you that are trying to get approved for a car loan with bad credit, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a great loan today!
For any questions or concerns, please don’t hesitate to contact us here!