We are all spending a considerable amount of time online, no thanks to the pandemic. You have probably seen advertisements online pitching the best car loans in Ontario. If you are curious about how car loans work or are thinking about buying a car but are worried about your credit score, then you are in the right place. Today we’re going to help you find a great car loan with bad credit.
The progression of auto financing in Canada
In our grandparent’s time, they paid cash for things or they simply did without. There were not many financing options available due to a lack of capital in the marketplace.
You would need to save for years to buy a vehicle, but with inflation, it would take the average Canadian a long time to save enough for a new car.
When the economy shifted online and deregulation was introduced into the Canadian economy, lenders were willing to give loans to people with different credit profiles.
Before deregulation, you had to go through your local bank to get a bank and if you were self-employed or had slight credit issues, it was practically impossible to get a car loan.
Subprime and prime car loans
The average credit score in Ontario varies depending on where you live but 680 is the general average. The 680 is also the minimum credit score needed for a prime interest rate car loan.
If you have a credit score over 680, the vast majority of car loan providers in Canada would love to give you a loan (provided you meet the income requirements).
Even if your credit score is under 680, you would still be considered a good candidate for a car loan but at a slightly higher interest rate. Where we enter subprime territory is when you reach the 620 and below credit score range.
We mentioned there are lenders out there to meet the needs of all Ontarians. If you are in the subprime category, you are not going to find a competitive car loan online.
Accessing a Great Car Loan with Bad Credit in Ontario
The only effective way you can access a great car loan with bad credit in Ontario is by going through a car dealership that specializes in this type of financing. You can spot these dealerships by how they advertise, “no credit refused”, “2nd chance credit” and other similar statements.
The dealership needs to run your credit report to get a better understanding of your financial situation. If you have good income, it gives the dealership more negotiating power when trying to secure your loan.
Something the dealership will ask is what caused your credit challenges. Did you lose a job or was there a divorce or some other major life event that impacted your finances? The dealership is not being “nosey”, they want to understand so they can explain to the lender that your credit issues are in the past and you are going to turn a new leaf.
Something the dealership will do right away is explain how to fix your credit issues so you never have to get another subprime car loan again.
There is a global shortage of cars, even if you only qualify for a subprime car loan, you should take it or you may have to wait a few years before you can buy a car.
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 car loan with bad credit today!
For any questions or concerns, please don’t hesitate to contact us here!