If you have been itching to buy a new car for a while now, it is likely that you have given this process a far bit of thought already. With that being said, you can never be too prepared especially when it comes to making large purchases like this. To add even more weight to this process may be the fact that you have poor credit. Regardless of the reasons behind your credit woes, often times obtaining credit can come with a higher degree of difficulty
Despite these additional barriers, nowadays there are more options for obtaining a loan through alternative credit sources, especially those that work with borrowers with a variety of credit score levels. Being able to understand that there are options for you even though you do not have perfect credit can help ease some of the stress associated with obtaining the car loan you need. Once you have set aside your worry about being denied financing, you can focus again on prepping for your car buying endeavours.
Here are 4 tips that can help you set things in motion for a stress-free car loan process and overcome your poor credit situation.
Tip 1: Develop a Savings Plan for your Down Payment
In the several months, even a year or so ahead of the date you want to purchase your new car, you can help ease into this process by beginning to develop a savings plan for your down payment. As you probably already know, making a down payment can help reduce the overall size of the amount you owe on your loan, as well as minimize your monthly payments. When you can afford to make a decent down payment, you can lower your monthly payments and this can help you stay on top of your loan payments overall. Being able to make your payments in a timely fashion can help you turn your bad credit situation around and raise that credit score.
Overall, the more you can save up for your car down payment, the better equipped you will be to make your payments on time and make your car expenses more manageable. How you will choose to save your money can occur in many forms. Establishing a savings account that you can transfer money to each month, for example, can help you earn enough in time to make your purchase.
Tip 2: Do Your Research
As part of the car buying process, doing your research can cover a variety of areas, including what type of car you will look to buy. This can mean that you will narrow down your options based on your personal needs and wants and have a few car choices to pursue. Next, you can research these cars and where they may be available. Which dealers/sellers are offering which prices – as well as any offers that may also allow you to save some additional money.
You can also research the best times of year to buy a car. For example, the spring is often an ideal time to shop for a car as new models make their way onto the sales floor – and many car dealers are looking to draw customers in with various promotions and reduced rates. Additionally, older models need to be moved out prior to the onset of the spring season – so you can also watch out for sales to crop up for vehicles from previous years. Either way, research and preparation in this area can also be an effective method of finding a quality deal on a car you really want, as well as help you save money as you try to improve your credit situation.
Tip 3: Know Your Finances
Knowing exactly where your finances stand is the best defence for helping to prepare yourself for the car loan process. Taking a look at how much you owe already in terms of credit, as well as the amount of money you earn each month is extremely important to your success at rebuilding your credit. Even though you may have done this once – or twice or even multiple times already – this is a continual process. Checking in and re-evaluating your finances again and again over the course of the year is a good way to make sure you are staying on top of your finances.
In this situation, most importantly what being more aware of your finances does is that it helps you learn how much you can afford towards both your upfront vehicle costs – as well as the long term expenses, such as monthly payments, insurance payments, repairs & maintenance, fuel costs, etc. This stage of the game will also inform your choice of vehicle as well as the loan features you will seek out through various lenders.
Tip 4: Compare Lenders/Loan Providers
With bad credit, potential car loan borrowers will assume they do not have very many options when it comes to obtaining financing. While it is true that perhaps you may have less leverage in this department, it does not mean you do not have options. As part of your car buying preparation, you will also want to compare lenders and loan providers. While there is a selection of lenders and loan facilitators that will be willing to help you obtain a loan, not all loan features will be created equally. Some loan providers will have few options, and some may have access to some more favourable terms.
Coming into this process you will bring with you, a set of personal needs and wants – and in turn you will be looking for a loan that is suitable for you. Your loan should be both manageable and as satisfying as possible. So seeking out lenders with loans that meet your needs more accurately can be done. While there may be some trade-offs here and there – since bad credit can not always mean you can get the best interest rate that exists in the market – it still can mean that among loan providers specializing in bad credit loans – they may be able to put you in touch with lenders who offer more reasonable rates and terms than others.
Ultimately, taking the time to search for a more appealing loan can definitely be in your best interests. If you can secure a more favourable loan, as well as relying on the other tips to help guide you in this process – you can set yourself up for a higher level of success in terms of being able to pay off your loan more effectively and without further derailing your credit score.
Canada Drives has been acting as a facilitator of car loans for drivers for quite some time and we make it our goal to assist Canadians as they search for the most appropriate loan that fits their personal needs. By linking you to a lender that can set you up with a manageable loan, you can rebuild your credit and get your finances back in the proper lane as a soon as possible.