In Canada, the credit score ranges from 300 - 900 points, and the higher the credit rating, the more likely you are to get an auto loan approval. For borrowers with poor credit or no credit, getting an auto loan might be difficult. Read this article if you have a bad credit history. We'll discuss the approval process that will get you approved for an auto loan.
Know Your Budget
The first step is to determine how much you can afford for your new car’s monthly payments. Since you have bad credit, the loan company will be looking at other factors to help them decide whether they should give you that approval or not. This would be your income. Even with bad credit, you will likely be approved for an auto loan if you pass the income requirement. Providing bank statements can also help you get secure financing.
Get a Used Car
Although there are perks to buying a brand-new vehicle, this may also cost you a fortune. Getting a used vehicle may be a good idea if you have bad credit. These types of vehicles are a lot more affordable, and some models may be certified used vehicles which means they can perform better. Contact a dealership that sells used vehicles and ask if they could help you finance it.
Dealerships usually partner with lenders who work with clients who have bad credit. You can try to get a pre-approval online and you can increase your chances if you pass the income requirement.
Prepare Your Down payment
You may likely be approved for an auto loan if you have a bigger down payment. After deciding on a budget, try saving up for a bigger down payment to increase your chances of getting approval for your auto loan. Saving up for a down payment could be the first step or the second step of the process to give you enough time. Once you've gotten your pre-approval from an online lender, we recommend also looking for a co-signer to increase your chances of getting approved for an auto loan or personal loan. This could be a family member or a friend who can vouch for you. However, do make sure that they have good credit standing.
Find Reliable Online Lenders
Once you have a down payment prepared, we recommend looking for trusted online lenders for auto financing. As mentioned, you may want to speak with car dealerships regarding this as they usually partner with lenders or providers for their loans.
Work on Your Credit Score
Are you ready to get started with the process? If you have a low credit score or a score of less than 600, we recommend slowly rebuilding it so that you can get approved for other loans in the future and get lower interest rates and better loan terms. Get your official credit report and settle all your financial obligations slowly to increase creditworthiness or get the perfect credit. If you need an auto loan, please get in touch with us today.
