While many think that approaching a car dealership or financial institution directly for a car loan is the only way to go, there are some people in desperate need of a vehicle who may not have that option.
Either they don’t have the means to pay for the loan on their own or they will be turned down because of a less-than-stellar credit rating.
Unfortunately, these assumptions are quite often proven correct by the many car buyers who only seek out a loan from a bank or dealership. As a result, many feel at a loss and unsure of how to move forward. While traditional lenders typically aren’t very open to approving loans for those with struggling credit scores, there are other places that do help these individuals get approved for vehicle financing. Canada Drives is one of these places that specialize in auto loans. We help many Canadians drive away in the car of their dreams when they didn’t think it would ever be possible.
Knowing companies like Canada Drives exist is a step in the right direction to obtaining a car loan. There are also some important factors to keep in mind when looking for a suitable car loan, the most important one being the affordability factor.
Hopefully you took into consideration how much you could afford when first starting to think about purchasing a new vehicle. Even when you plan on getting a car loan, it is important to determine if that car you have been eyeing is realistically in your price range. It’s true that the total you may expect to pay to secure your vehicle does not involve the full value of the car upfront. However, it does include the amount of money you will need to put aside for the monthly car payments, the accumulative interest on the loan, as well as the cost of a down payment.
One of the best tools you can use to understand how much you can manage to pay for your new car is an online loan calculator tool (available through many different websites). Loan calculators break down the loan specifics including length of term, interest, monthly payments, down payment amount (including cash paid in hand upfront, trade in values and any rebates), and will ultimately give you a better idea of the actual amount of money you’ll need to pay.
Included in this affordability calculation is the amount of interest you’ll pay on the principal amount of the vehicle, which should also be taken into consideration. Banks and traditional lenders may or may not be able to offer you a competitive rate –it is often calculated on a case-by-case basis. On the off chance you have been approved for a loan having bad credit, you are likely to be given a higher interest rate than you may have otherwise received with a better credit score. Canada Drives has access to a large network of lenders to provide you with more options than a financial institution. We can help find you the right lender and even a better interest rate.
Monthly saving is one of the best ways to determine how much you can afford on a monthly basis. You will be able to see how much disposable income you have that can easily go towards your monthly payments. Additionally, the savings can be used as a down payment that would help to ensure a more affordable car loan. This will not only decrease the starting balance of your loan but the monthly payments as well, so you can work towards paying off the loan in a shorter amount of time.
Finally, it’s recommended to get a copy of your credit history to get an idea of how much bargaining room you have when looking for a loan. Armed with this information, you will become even more aware of what you can afford. Your credit history plays a crucial role when determining the amount of financing you are likely to receive, and the specific terms set by your lender. If you are unsure of where to locate a copy of your credit report, make sure to get in touch with the Canadian credit bureaus – TransUnion and Equifax.
Once you have an accurate indication of how much you can afford to spend, you can then start to look for a car within your budget. It’s better to know in advance rather than be surprised later on – ignorance isn’t always bliss, especially not in this case. For assistance calculating how much you can afford, feel free to get in touch with the Canada Drives team. We can help you determine the best budget, guide you through the loan approval process, and get you one step closer to hopping into that new vehicle.