Our team has put together a blueprint of how you can get access to low interest car loans in Canada. While we have made our best effort, some variables cannot be controlled, like Government intervention.
Where to Start
Start by looking at your credit score, lenders are feeling particularly apprehensive since the pandemic is still causing lingering issues in the global economy.
The credit score you should aim for is 700 but if you can get higher than that, it will put you in a position of confidence.
If your credit score is under 700, you can still get a car loan but you will need to work with experts to optimize your chances of success and you’ll struggle to get approved for low interest car loans.
Clean up Your credit report
All responsible lenders will check your credit report before lending to you so your first task is to make sure your report is 100% accurate. Check it for errors, make sure everything is accurate and have any changes made if you spot mistakes.
Get a copy of your report from TransUnion or Equifax. You’re entitled to one free check per year, per credit bureau. Use them wisely.
Improve your credit score
Your credit score is a reflection of how you handle debt. Therefore, it’s a reflection of how much of a financial risk you are to a lender. The higher your score, the lower your perceived risk.
Do what you can to increase your score as much as possible. Keep borrowing sensible, always pay on time, make sure your credit report is accurate and only apply for debt you want.
Improve Your Debit-to-Income Ratio
Your debt to income ratio is another factor that lenders may consider when deciding whether to approve a low interest car loan.
This ratio compares your entire debt load to your gross annual income. There isn’t enough room in your budget if you are currently devoting more than 40% of your income to paying off debts.
This is fantastic news if you have credit problems but a solid income because it allows you to get approved for a larger loan.
Having savings in the bank won’t change a lender’s mind about giving you a car loan but it will reassure them that you’re financially secure and have money to cover the loan should anything go wrong in life.
Savings are an essential ingredient in your financial wellbeing and are a good indicator of whether you would be a good borrower or not.
When comparing financing for new and used cars, the interest rate on used cars is typically higher. There are numerous factors that affect used vehicle loans but we won’t delve too deeply into those factors.
Benefits of getting expert help
When you have credit issues, you need someone in your corner that can help you find lenders willing to give you a chance. These experts also have access to wholesale car loans. This means the expert can secure you low interest car loans, it may not be ultra-low because of credit issues but they will still save you money.
If you are wondering where to find these experts, wonder no more, they are at your neighborhood car dealership. The dealership has built a network of lenders across Canada who specialize in a variety of customer profiles including those who have credit issues.
The dealership can negotiate a lower rate because they do a large amount of business with these lenders regularly. The average consumer would never be able to get these preferential rates, only by working with a local dealership can you benefit from the savings being provided.
These same dealerships are there to help you repair your credit as well. They can give you a game plan on what steps you must take to get your credit score over 700, if you follow their advice, you will surely come out on top.
The good news is you can get a low-interest car loan in Cambridge but you have to reach out to your local dealership now.
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!