If you have bad credit, you can still buy a car, but there are some common mistakes that must be avoided. How do you know you have bad credit?
Just because you applied for a loan and got rejected does not mean you have “bad credit”; certain lenders will not approve loans to self-employed borrowers or applicants that have income that is hard to substantiate
What constitutes bad credit?
The median credit score in Canada is around 660; anything over that is considered prime, and to be classified as bad credit, your score would need to be under 600.
You can access your free credit score by going to TransUnion and Equifax, they have paid services, but the free one should meet your needs.
You must review the credit score posted by each agency because they each have their proprietary scoring model.
How to turn your credit score around for the better
You can do some simple things to turn your credit around for the better. Your payment history represents, on average, 30% of your total credit score, so let’s start with that.
Have you been making all of your payments on time, all of the time?
You may have missed a payment by accident, but these accounts may be significantly past due and in collections if you have bad credit.
The only way you can improve your credit is by bringing your accounts current, so over the course of the next couple of weeks, you should focus on bringing your debts up to date.
This is not easy, but the effort will literally save you thousands of dollars in the future, so it should be your top priority.
Picking the car best suited for your budget
With car prices rising, your best option is to buy a used car, there is a limited number of new cars available, and the average price of a new car can easily exceed $50,000.
These high prices coupled with high-interest rates will be too costly to bear, so your best option is buying a used car.
While buying a used car may not be your preference, think of it as a stepping stone while you work on rebuilding your credit. You can either refinance the loan to a lower rate or buy a brand new car with your higher credit score in a year or two.
Getting the right professional help
A common mistake that people make when shopping for a bad credit car loan is to apply for car loans online because the websites promise great deals.
However, the best and only effective way to get approved for a bad credit car loan in Canada is through a dealership. These dealerships are set up to process these loans and already have cars in their inventory that you could drive home today.
These dealerships provide exceptional customer service and can show you ways to improve your credit score rapidly.
If you want to get a great car at a competitive price even though you have bad credit, then your best option is going through a car dealership.
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 car loan today!
For any questions or concerns, please don’t hesitate to contact us here!