Canadians with bad credit and need to buy a car have another challenge to overcome, how inflation is impacting credit score. Our Brantford auto loans team explains.
In Canada, the inflation rate has exceeded 5%, which may not sound like a lot but remember, this applies to everything in the economy, and this was in a single month.
Did your income increase by 5% in a single month?
Most of us are lucky if our employer gives us a 2% annual raise, and that is after working hard to hit targets.
When inflation is impacting credit score by driving up the costs of everything, you are forced to stretch your budget even further to keep up.
What you need to know about debt-to-income ratios
Remember how we said that inflation is going to make everything more expensive, so you have less disposable income for other things like Brantford car loans.
With the average car loan in Canada over $500 per month, you will need to dig really deep if you want to have enough cash to service that loan.
Since we are on the topic of servicing your debts, lenders will not issue a loan if your debt-to-income is more than 40%, which means your total debts cannot exceed forty percent of your monthly gross income.
Since you have bad credit, the interest rate charged on the car loan is going to be higher than what someone with great credit would pay.
The higher interest rate means you would not be able to get a new car loan, so your best option would be a previously owned vehicle.
Why do you have bad credit?
This is not a criticism; anyone can experience financial hardship and fall behind their debts. The average Canadian is $200 away from financial hardship.
While anyone can fall into hardship, you need to find out what is dragging down your credit score, so you can start taking steps to boost it.
Sign up for credit monitoring services like Credit Karma; it gives you free access to your TransUnion credit report.
Are there any inaccurate details inside your credit report? Errors can bring down your credit score, which is something you cannot ignore. Items inside your credit report will stay there for up to seven years.
Make it a priority to bring any past due accounts up to date, and going forward, always pay your debts on time.
This is a surefire way to boost your credit score, so you will have access to the best credit products in the future.
Where to find Brantford car loans with bad credit
You will not be able to get a car loan through online sources, the websites may claim to have the most competitive bad credit car loans, but they do not.
The best source of bad credit car loans is by going through a dealership in your area. The dealerships already know all of the lenders in Canada and will select those that will give you the most favourable terms based on your unique financial situation.
Now that you know how inflation is impacting credit score Canada, you should start reaching out before interest rates, and car prices start to rise.
Fill in the form below to get approved for your next car loan! we have a team of credit specialists ready to help you with buying a car in 2022 suited to your needs and will work with you no matter your credit score.
For any questions or concerns, please don’t hesitate to contact us here!