How to Get Pre-Approved for a Car Loan With Bad Credit
You’ll often hear the term “preapproval” or “pre-approved” thrown around at banks and car dealerships – but what does it mean exactly and why do people get them? See how a preapproval can work to your advantage and how to get pre-approved for a car loan, personal loan, and more.
When you have a high credit score or a chunk of savings, it’s easy to obtain a loan or purchase a big-ticket item like a car outright. Sadly, this isn’t possible for many Canadians. If your credit score isn’t where you’d like it to be, then you know how stressful it can be to get a loan to purchase everyday essentials or take care of a surprise expense. Fortunately, a pre-approved loan can give you peace of mind and help secure the funds you need.
What is a loan preapproval?
Traditionally, a pre-approved loan is when a lender tells you how much they’re willing to give you based on your current credit and financial records. Preapprovals can be done for all sorts of loans and can remain available for anywhere from a few days to a few months.
People like getting them before purchasing a house or car so they know how much money they can obtain along with important details such as interest rates and term conditions. Preapprovals also increase bargaining power and give you the confidence to find what you’re looking for and make an offer.
What types of loans can I get pre-approved for?
You can get pre-approved for a variety of loans including:
- Mortgages: Mortgage preapprovals simplify the home purchasing process by telling you how much you can afford to spend on a home and what your monthly mortgage payment would be. It also shows your realtor that you’re serious about buying and can come in handy during competitive offer situations. Another great perk of preapproval is it allows you to lock in a mortgage rate for 120 to 160 days, therefore protecting you from rising rates while you search for the perfect home.
- Personal loans: The funds from a personal instalment loan can be used any way you like and is repaid in fixed monthly payments. If you have good credit, banks and other financial institutions often send pre-approved personal loan offers to you by mail or email. Preapproval offers sent directly to you come with various benefits including quicker processing times and competitive rates. Fortunately, trusted online lenders have made personal loans more accessible for customers with low credit scores.
- Credit cards: You probably have received pre-approved credit cards in the mail, but these offers don’t mean you’re actually approved. You can still be rejected if you don’t meet the lender’s income and credit score requirements. If you have bad credit, your best bet is to get a guaranteed credit card. Designed for credit-building purposes, this type of credit card works just like a normal one, but you might be required to put down a deposit before you’re granted access to credit. Your payment history is also sent to the credit bureaus so your credit score will go up if you make payments on time.
- Car loans: Getting pre-approved for a car loan is one of the smartest first things you can do when you're getting ready to buy a car. Shopping for a car can be an overwhelming task, especially if your credit isn’t perfect. But with the finance approval already taken care of, you can finally enjoy shopping for your next vehicle, and you’ll save a lot of time because you’ll know what you can afford.
Where can I get pre-approved for a car loan?
Major banks and credit unions advertise pre-approved loans. However, it can be frustrating working with these traditional sources as they often require lots of paperwork and multiple in-person appointments. You’ll also have a hard time tapping into these services if you possess a less-than-ideal credit score.
Car dealerships have vehicle financing options too, but many don’t have the bandwidth to support Canadians with bad credit or no credit.
Fortunately, times have changed.
Emerging online retailers are assisting Canadians facing all sorts of credit situations. E-commerce companies—like Canada Drives—work with a massive network of lending partners to help all Canadians get access to reliable vehicles at excellent financing rates.
Get pre-approved with Canada Drives today. Simply submit some basic information online and we will let you know the maximum vehicle purchase price that you will likely qualify for. With a preapproval in your back pocket, you’ll be able to focus on vehicles you can comfortably afford, making your car-shopping efforts a lot more enjoyable.
Get behind the wheel of your dream car with Canada Drives:
- Certified Vehicles: Canada Drives has hundreds of pre-owned cars, trucks, and SUVs to choose from, all meticulously inspected and reconditioned.
- Get Pre-Approved For Free: It takes three minutes to apply for a Canada Drives preapproval and it won't cost you anything.
- All Credit Scores Welcome: Get the vehicle financing you need, even if you have poor credit, no credit, or have filed for bankruptcy.
- 7-Day Test Own: Our 7-day “Love It or Return It” guarantee lets you shop until it feels right or get your money back!
- Buy Online & Save: Buying online means less overhead, no dealer fees, and thus more savings for the customer.
- Free Warranty Protection: Your car is covered under our no-charge 30 Day / 1,500 km warranty for added peace-of-mind.
- 1-Click CARFAX History Reports: Get free CARFAX reports and know the full history of what you’re buying.
- 150-Point Inspections: Professionally inspected vehicles that meet a high standard of quality.
- Delivered To Your Door: We’ll pick up and drop the car off for you – total convenience!
Ready to find your perfect ride? Visit Canada Drives today!