6 Tricks for Getting a Car Loan with Bad Credit
“These dealerships can be hard to find as many will advertise this service, but few will be effective at helping hard-to-finance customers.”
Too many Canadians are being forced to use unacceptable vehicles as many banks have turned to extremely stringent approval qualifications. In a country with winters as harsh as Canada’s it is increasingly important that Canadians are able to get a quality vehicle without being strapped with high payments and unmanageable debt loads. We’ve put together six tricks that will help you obtain the car that you want despite what your credit history says.
1. Rent to Own Programs
This is an option, but typically only with older vehicles and at higher interest rates. You must be sure that these places will report the positive repayment history to the credit bureaus (Transunion / Equifax) or there’s a chance your credit score may not improve even after full repayment.
2. Buy a Vehicle with Cash
Although this is not an option for a lot of Canadians, the one way to beat the bank is to avoid them all together. The downside is you are very limited in your vehicle selection depending on the amount of cash you have saved for your vehicle. If your cash savings don't allow for a very good vehicle purchase now, it may just cost you more money in the long run.
3. Online Car Loan Service
When it comes to buying a car online, things can get pretty hectic. You’re constantly hunting for the right price and the right car, and most of all, someone who will accept your credit score. What if there was a service that can help you with this process with very minimal work involved? Canada Drives’ online application allows customers to apply for a vehicle and financing (even with bad credit) online. The application procedure is straightforward with what information is needed, and within hours to a day of completion, a local dealership will call you with a selection of vehicles you’re already pre-approved for!
4. Large down payment
Putting down a large down payment upfront can dramatically lower the cost of your monthly payment. But just as we mentioned in our second point; Buy a Vehicle with Cash, this requires having large sum of money already saved up and can end up being a deciding factor to what vehicle you make available for yourself. Again, this is only possible if you have a sizable savings account.
5. Credit Rebuild Programs
There are programs available that allow Canadians to slowly improve their credit score by making payments on time (sometimes with secured credit cards). This is only a good option if you have time to wait to get a vehicle and don’t need one right away as it may take a while for your credit to improve to a point where you can get an auto loan through your local bank.
6. Dealership with Non-Prime Departments
Some dealerships have special departments that can assist customers with low credit scores (or new to credit) in getting a vehicle. These dealerships can be hard to find as many will advertise this service, but few will be effective at helping hard-to-finance customers.
While all of these points are sure fire ways to help you build credit and get approved for a loan, they may not be all suitable options depending on your financial situation. It’s best to find the one that will be the easiest and one that will work around your situation to make the car buying process a much easier procedure.