Finding a car loan that works for you can often be a very confusing process, especially if you have bad credit. Without the right information, the hunt for a car loan can be a daunting task when your credit has not been established.
The banks and lenders available through most dealerships are less likely to provide you with any auto financing if your credit is less than great. While it may seem that all hope for getting a vehicle is lost, it is important to keep in mind that there are places that help those with poor or no credit get the auto financing they need.
Canada Drives works with customers across Canada who are looking to build or rebuild their credit, but still want a good finance rate and options on excellent vehicles. When you complete an application you have a dedicated finance specialist who will look after working out all of your options. We match you with the dealer partner that is best able to accommodate your exact situation.
Knowing that it is possible to be approved for a car loan with bad/no credit is a great step in the right direction however, there are some things you should keep in mind when applying. There are certain details that lenders will be looking out for before handing over any type of financing.
Before even considering approving someone for a car loan, lenders make sure that the individual applying has a bank account. They want the ability to take out payments as simply as possible. During the loan application process, be sure to provide a void cheque or a pre-authorized payment form stamped by your bank branch to assure the lender that they can take payments out of your account each month.
Once lenders have established that you have a bank account, twill be looking to see if you are employed or have a steady income. This proves to them that you can afford to make your payments on time. Typically it is required that you make a minimum of $1500/month and you have been at your current job for at least 3 months. The longer you stay in the position, the more likely you are to stay there which reassures the lender of the reliability of your income. For people unable maintain full-time employment, there are a few lenders willing to provide financing to those who get their income from government programs. That includes programs like ODSP and CPP.
While many overlook the importance of their address, it is a key detail that lenders take into consideration when determining whether or not to approve you for a car loan. Knowing your address is crucial when completing all of the paperwork associated with the loan. Lenders also need to know where you live in case they need to get in touch with you or send you anything regarding your vehicle financing. After, it is important to then focus on your car loan payments. It is crucial to know how payments are calculated so you know what to expect. Two people purchasing the exact same vehicle can potentially have very different payments. Loan payments are determined by numerous factors but there are three main points to direct your attention to.
The principal is a major aspect of the lender’s car loan payment calculation. The principal is the total cost of the vehicle you purchase. This figure also includes any fees charged by the dealership or lender when purchasing your vehicle.
The term of your loan greatly affects your car payments. It is the length of time that one must make payments for. There is no standard term for a car loan. Typically the loan term can be anywhere from 36 to 72 months (3-6 years) but it may be possible to have a shorter or longer loan term. If you choose a shorter term, payments may be larger however your loan will be paid off faster. If you would rather have a longer loan term, then you will be able to spread your payments over a longer amount of time therefore making your payments smaller. Whether or not someone wants a longer or shorter loan term is up to the loan borrower. They need to keep their finances/budget in mind and pick the term that will grant them affordable payments
Being approved for a car loan is not always as challenging as many think. Keeping in mind what lenders look for when determining candidates for auto financing, and knowing how they come up with your payments will give you a thorough understanding of the car loan you will receive. Using this knowledge and the services provided by companies like Canada Drives will make securing auto financing as simple as can be – even with bad or no credit.