If you need to buy a car while in debt, but lenders have turned you down because of unpaid payday loans, we are going to show you what steps must be taken to get approved for a car going forward.
The payday loan industry is known for charging exorbitant interest rates that border on the criminal.
Now, to circumvent new regulations, these lenders are issuing installment loans, but those who take the loans are stuck in a debt trap few can escape.
Action items you need to implement immediately
You should sign up for Credit Karma or a similar free app that will give you real-time access to your credit report and score.
Write down all of the accounts, including the payday loans that are past due or have already entered collections.
Bring all of the past due accounts current as soon as you can, once those accounts are up to date. You need to allocate funds from your budget to pay off the collections.
While these payday lenders may be getting away with daylight robbery, until those collections are paid off, your credit score will not recover.
Plus, those unpaid collections stay on your credit report for up to seven years, so they are not going away by itself.
While you need to pay off the unpaid loans, you can still buy a car while in debt because, let’s face it, in Canada, you need a car if you want to lead a normal life.
Taking a look at your budget
Potential lenders will overlook credit issues, especially if there were extenuating circumstances like a job loss due to the pandemic.
What lenders are particularly interested in is your income and how much you have available to service your car loan.
The majority of lenders will issue loans provided your debt-to-income ratio is under forty percent (40%).
To figure out where you stand, take your gross income, multiply that number by zero point four, and now take that number and subtract all of your current debts. If there is cash left over, that is what can go towards the car loan.
The average car loan is $400-$600, so you do not have enough cash to cover the car loan; you should consider taking extra shifts at work to boost your income.
Getting the expert support you need
This is a journey you cannot complete on your own; you need the help of experts who have assisted other borrowers just like you in the past.
Your best option is to work with dealerships in your community that you can meet in person.
The dealership is set up to process complicated car loans like yours, and the dealership can also go to bat for you when negotiating the loan with the lender.
Because the dealership has a relationship with the lender, the odds of you getting approved for a car loan are dramatically higher compared to if you tried yourself.
The dealership will have their credit experts go over your file and show you the steps that must be taken to have excellent credit in the future.
Click here to get approved for your next great new car loan in Canada online today! we have a team of credit specialists ready to help you buy a car while in debt and will work with you no matter your credit score.
For any questions or concerns, please don’t hesitate to contact us here!