You’re in the right spot if you have bad credit and need a car loan. We’re going to look at this situation realistically and show you how to get a car loan with bad credit. Even if you tried to get a car loan and were turned down, these tips will help.
How bad is your credit?
Have you filed for bankruptcy or a consumer proposal in the past few months? We can’t help if you filed for either of these because the law says you can’t take on new debt if you are bankrupt or under a consumer proposal.
If neither of those things applies to you, please keep reading
You need to figure out how your money is doing right now. What is your credit score? If your credit score is under 600, you have bad credit.
The average credit score in Canada is around 670. In Canada, you need a score in the 720s to get the best interest rates.
Your credit score can get better, but you have to deal with what caused the bad score in the first place. Look for accounts that are overdue; once you’ve found them, you’ll need to bring them up to date.
If these accounts go to collections or are “charged off as bad debt,” it will stay on your credit report for up to seven (7) years.
Once you’ve paid off all of your bills, your credit score will start to go up. Chances are you have too much debt, so try to find extra money to put toward paying it off.
Putting money aside in your budget for a new car
You can start working on your budget to make room for a new car payment while you wait for your credit score to improve. In Canada, the average car payment is about $550, so you should plan your budget around that amount to be safe.
You will have to pay more interest on the car loan, so the total amount you can borrow will be less. Most people with bad credit can’t buy a brand-new car, so they have to buy one that’s already been used.
There are used cars for sale that are in great shape. Most of them come with a warranty, so you won’t have to worry.
Getting the car buying support you need
There are a lot of dealerships that sell used cars, but you need to choose one that can help you get a loan even if you have bad credit.
You can find these dealerships by looking for ones that say “no credit refused” in their ads. These dealerships know people who offer car loans to people with bad credit and can talk to them on your behalf to get the best deal.
Keep in mind that your loan is considered high risk, which means that you will have to pay a higher interest rate to get it.
After a year or two, when your credit score is in the 700s, you can refinance your current car loan or buy a new car outright. Anyone can get into financial trouble and have bad credit, but you can change your life for the better.
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!