How to get a car loan when you have unpaid collections

Posted by on Jul 19, 2022 - Archived under Bad Credit Car Loan Tips

If you need to get a new car but have unpaid collections inside your credit report, you are in the right place. We have done the legwork and have come up with some practical tips that every Canadian can follow in order to get a good deal on their next car.

Dealing with your credit issues head-on

The first thing you need to realize is your credit problems are not going to go away by themselves.

Unpaid collections can stay on your credit report for seven years, and in Canada, you need credit to live, so you need to start dealing with this issue ASAP.

Start the process by signing up with TransUnion and Equifax to make sure there are no errors inside your credit report that could end up compounding your credit issues.

Errors do appear in credit reports; nothing is 100% perfect in this world.

If there are errors inside your credit report, both TransUnion and Equifax have official dispute channels that you can go through and have these errors corrected at no cost to you.

Budgeting to repay your unpaid collections

2022 has been a financially challenging year for everyone in Canada; it seems like our money isn’t buying as much as it once did.

You are not alone; inflation is making even the most simple purchases feel like a major financial commitment.

You will need to look at your current budget and find additional funds that can go towards paying off these unpaid collections.

A few years ago, long before we heard the word Covid, you could get a car loan approved with unpaid collections; some lenders would pay off the collections and simply add the unpaid collections to the total loan being financed.

Lenders are now very careful, and you will not find lenders that are willing to give you a loan that is more than what the vehicle is worth, no matter how much they like you.

Also, some lenders have specific underwriting rules where they will not issue a new loan if you have unpaid collections in the last 12 months.

We understand that this may seem like a pain in the backside, but you need to look at it from the perspective of the lender.

Would you issue a loan to someone who has a recent history of not keeping his/her financial commitments?

Where to get a good car loan with unpaid collections

Whenever you are looking for any type of auto financing, don’t bother with the websites that offer loan quotes online or even your local bank.

You need to go to the experts, head over to your local car dealership, and explain your situation to them.

The dealership is not there to judge you; they are there to help you get the best possible car loan based on your financial situation.

When you go through the dealership, they will discuss your situation with prospective lenders and explain why you had accounts go into collections in the first place; perhaps you lost your job due to Covid.

Now that you know how to buy a car in Canada with unpaid collections, why not contact your dealership right now and begin reviewing your options.

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!

Let’s get in touch! 

Dixie Auto Loans