How to Get Pre-Approved for a Loan With Bad Credit

March 12, 2020

You’ll often hear the term “pre-approval” or “pre-approved” thrown around at banks and car dealerships – but what does it mean exactly and why do people get them? See how pre-approval 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 pre-approved loan?

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. Pre-approvals 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. Pre-approvals 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 pre-approval simplifies 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 pre-approval 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.

  • Car loans: Getting pre-approved for a car loan is one of the smartest things you can do if you need a new vehicle but have bad credit. 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. 

  • Personal loans: The funds from a personal installment 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. Pre-approval 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.

Where can I get pre-approved for a 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. 

Credible online lenders are levelling the playing field by assisting Canadians facing all sorts of credit situations. Tech companies—like Canada Drives—specialize in helping bad credit customers get access to the financial services they need and help set them on the path to a brighter financial standing. 

How do I get pre-approved for a personal loan with bad credit?

You can apply for pre-approval from various online lenders, but what happens if you need quick cash and don’t have time to go through the pre-approval process? In this case, there are reputable lenders like Fresh Start Finance that can approve you in minutes. Fresh Start Finance provides speedy personal loans of up to $15,000, regardless of your credit situation. Flexible repayment plans, no hidden fees, and competitive interest rates are just some of the other great perks you can take advantage of.

Can I get a guaranteed credit card with bad credit?

You can get a guaranteed credit card with Capital One no matter what your credit score is. The Canadian credit card issuer promotes low-interest rates and credit limits of up to $7,000. Zero liability insurance also protects you from unauthorized card use. There is an app for iOS and Android as well so you can monitor your spending and pay off your balance from your phone.

How do I get pre-approved for a car loan with bad credit?

Canada Drives can get you pre-approved for a car in no time. After completing a quick online application, the fintech company will match you with local certified dealers that are willing to provide vehicle financing. By doing all the work for you, Canada Drives saves you valuable time and presents the best options for your financial situation. 

Get behind the wheel of your dream car with Canada Drives:

  • Extensive network: Canada Drives has partnered with over 350 dealers so you can choose from thousands of vehicles and a variety of special financing programs.
  • Get pre-approved for free: You won’t have to commit to anything until you’ve visited the dealership and taken the car for a test drive. Changed your mind about the vehicle? No problem, you’re free to walk away at any time.
  • All credit scores welcome: Get the vehicle financing you need, even if you have poor credit, no credit, or have filed for bankruptcy. 
  • Award-winning: Canada Drives is an industry leader for pre-approved car loans and was even named one of Deloitte’s Best Managed Companies and a Technology Fast 50 winner.
  • Seamless application process: Online application takes just minutes and can be completed from the comfort of your home.
  • Trusted by Canadians: Hundreds of thousands of Canadians have gotten the car they want thanks to Canada Drives. See what some of them have to say on Trustpilot

Take the first step towards a pre-approved car loan by going to our simple online application or calling 1-888-865-6402.

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