Have you recently been denied a vehicle loan? A credit score in the 500s or lower can make the process of buying an automobile quite difficult.
Our objective is to teach you the steps necessary to regain financial stability and still buy a car today (sounds like a lot of work, so roll up your sleeves).
Getting back to financial basics
We need to go back to when your credit problems began. The fact that your credit score is in the 500s implies that you need to address some fundamental problems with your finances.
TransUnion and Equifax provide free credit monitoring services; sign up for them. Now that you have access to your credit reports, you should search for any accounts that are in collections or are severely delinquent.
When a bill is past due for more than 30 days, your credit score will suffer, but you can recover. Once the account has been sent to collections, you must still pay it off; no lender will approve your auto loan until the collections have been settled.
If you hold a big amount of debt and have little credit available, you should keep all of your existing accounts up to date while at the same time begin paying down your existing debts. Your credit utilization rate should fall below 35%.
You must tighten your belt and revise your budget to evaluate how much cash is available to service your present debt in addition to the suggested auto loan. The average monthly payment for a car loan in Canada is slightly over $600, but you must also budget for insurance, gas, and maintenance.
Increase your income to help pay down your existing debt
The epidemic has altered how we work, with the hybrid model becoming increasingly prevalent (spending 2 days at the office and 3 days working from home). You should consider supplementing your income with a second job.
If you are currently employed full-time, driving for Lyft or Uber for a few hours on the weekend may provide you with a cash influx. This will require some personal sacrifice on your end, but it is the price that must be paid if you want to get what you want in life.
Where to obtain an auto loan today while waiting for your credit score to improve
You’ve done the steps we suggested to improve your credit, but it may be a few months before you begin to see results. So what can you do now to obtain an auto loan? A local vehicle dealership is the best and, frankly, only viable option moving forward.
You will not get approved for a brand new car loan with a credit score in the 500s, but the dealership can get you approved for a great quality used car.
The loan will have a high-interest rate, but you can refinance it in a few months once your credit score has increased. This is the most straightforward route to success; contact your local dealership immediately to get things rolling.
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!