Car buyers with good or excellent credit scores will undoubtedly get better terms and interest rates, however, those with credit problems can still find companies which are willing to work with them to get the best possible deal for their current financial and credit situations. In fact, there are quite a number of people who are in a financially bad situation. Only fewer than 7% of buyers in Canada, with excellent credit rating would qualify for the special 0% or low interest offers which car commercials often feature. So, the rest of the buyers should shop around and take the time to find the best possible deal for his or her financial situation. Remember, even if the only deal which is available has rather high interest, working to improve one’s credit score can later result in becoming eligible for a better deal. If you have a good/excellent credit, then all you need to do is find out those dealers who will offer you the best possible interest rate (you might be eligible for 0% interest loans).
However, if you have a bad credit then the following question and answer section can guide you through the loan approval process in Canada.
Q: Can I get approved even with bad credit or after bankruptcy?
A: Yes, you most certainly can! There are numerous reputed companies that arrange Bad Credit Car Loans Canada. If you have filed for bankruptcy, you can get approved the day after your discharge. Few reputed companies specializes in bad credit and bankruptcy loans, they maintain a close business relationship with a network of lenders and finance companies throughout Canada, and they can work out a loan tailored to suit your specific needs or financial situation.
Q: How do I go about re-establishing my credit?
A: Simply follow this 6-step plan for rebuilding your credit status:
- Secure a copy of your personal credit report
- Meet with your creditors and try to work out a strategy to improve your credit rating
- Devise a strategy aimed at effectively reducing your outstanding accounts
- Leverage your new auto loan to improve your credit score
- Pay all accounts as they fall due or as agreed
- Safeguard your credit—it’s one of your most valuable assets!
Q: Bad credit loan means high interest rates, right?
A: Short answer: Yes. Long answer: That may be the case, but only because your car loan lender took a greater risk in allowing your loan than they would have if your credit rating was good. Just like insurance companies, this has always been the way the lending system works: Your interest rates will increase or decrease based on the associated risk. Now look at it on the bright side: As you clean up your credit record you will now be able to obtain refinancing at a reduced rate.
Q: What type of vehicle can I purchase?
A: In Canada you can get bad credit auto loans for the purchase of new or used cars, trucks and SUVs.
Q: What is a co-signer?
A: A co-signer is someone who guarantees that the car loan will be paid, which in effect makes them equally responsibility for the contract. If you have special financing needs, adding a co-signer to your loan expands your options, affording you the opportunity to build a long term relationship with a bank or lender. Once you have proven your ability to make timely payments, a positive relationship ensues, opening the door to an even wider array of options without the need of a co-signer.
Q: My credit is bad, do I need a co-signer for my car loan?
A: It depends on your financial situation. If your credit is not that bad or if you’re able to show that you generate enough income to afford the monthly new car loan payment, you may qualify for bad credit loan without a co-signer. Consult a certified agent.
Q: I have been turned down so many times in the past. Is this the end of the road for me?
A: No, absolutely not! Companies like NewCarCanada.ca has access to an extensive network of reputable lenders and leasing companies, most of whom are more than happy to accommodate your car loan request.
Q: Does a car loan help me re-establish my credit?
A: Yes that’s right! It may seem counter-intuitive, but did you know that the best way to rebuild credit is to get more credit? Every timely payment you make strengthens your credit status.
Q: How much can I borrow?
A: Usually any amount between $500 and $40,000, depending on your ability to repay. If you are unsure how much of a loan you can get, discuss with an agent about your income and expenditure.
Q: Does having bad credit or no credit mean I will have to settle for used- or older-model cars?
A: Not necessarily. Anyone with an approved car loan can qualify for a new or late model vehicle. As a matter of fact, the better the car, the more motivated you will be at re-establishing your credit. However, there will be nothing in your contract which will prevent the local dealer from matching you up with a type of vehicle that best suits your financial situation.
Q: What do I need in order to obtain a loan?
A: Valid driver’s license, Proof of income, Proof of residence, Current insurance.