Today, we’re going to show you what it takes to get a great deal on a car loan in Ontario, or anywhere in Canada for that matter. Car prices are on the rise and if you do not use the right approach, you could end up with a high-interest car loan.
Taking a closer look at your credit report
Your credit score plays a pivotal role in whether you qualify for a prime or subprime car loan. Right now the minimum credit score you need to get a prime car loan is 680 but that is the bare minimum so you should aim for 720 or better.
If your credit score is under 680, you can get a loan but the lender is going to charge you a higher interest rate. Throughout the pandemic, interest rates were kept low by the Bank of Canada using quantitative easing but inflation is at historic highs, so the bank is starting to raise interest rates in an attempt to curb inflation.
When interest rates rise, it means you have to spend more money servicing the debt than actually paying it down, this impacts how much money you can borrow for a car loan so you we recommend you try and get a great deal on a car loan in Ontario ASAP.
Fixing your credit issues
You will need to get a copy of your credit report from both Equifax and TransUnion. A common mistake that people make is relying solely on one report, prospective lenders typically use both reporting agencies before they decide to approve a loan.
While looking at your credit reports, try to find any accounts that are past due or went to collections. Having an account in collections will take a terrible toll on your credit report.
If you come across any accounts that are in collections or past due, pay them as soon as possible. The longer the accounts stay negative, the longer it will take for your credit score to bounce back.
Finding the right car for your budget
After you have fixed your credit issues, it is time to start making a list of what you want in a car. Will you be getting a hybrid or all-electric vehicle commonly referred to as an “EV”? There are government rebates being offered when you buy an EV but you will need to have good credit in order to afford the higher price tag that comes with these super-efficient vehicles.
How to get a great deal on a car loan with credit issues
The only way you have a decent chance of getting a competitive interest rate for your new car is by going through a local dealership.
Your local car dealerships have relationships with lenders all across Canada and some the general public cannot access. The dealership is able to negotiate the lowest interest rate possible based on your circumstances and can help you repair your credit.
The traditional car dealership has evolved and now meets the most stringent industry standards so you have complete peace of mind knowing you are getting top-notch service.
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a great deal on a car loan today!
For any questions or concerns, please don’t hesitate to contact us here!