When you want a car and you want it today, there are things you can do to get the best rates without having to shop around for weeks on end.
In this 3-minute read, you'll discover the most convenient way to source the best auto financing rates today, as well as strategies for securing the most desirable interest rates tomorrow too.
While your credit score is important, many lenders look at other factors including your income. So if your credit score isn’t the greatest, there are a few things you can do to ensure the best rates today while setting yourself up for better credit tomorrow.
The auto finance pre-approval is a game-changer for car buyers. Not only does it reduce (or completely eliminate) the time you have to spend at the car dealership, but a pre-approval lets you shop for your new car more confidently. It can even save you money.
Three reasons why car shoppers should get pre-approved:
When you’re pre-approved, you can more accurately shop for a vehicle. The total price, your expected payment, your approximate interest rate – it’s all clear upfront BEFORE you start hopping from dealership to dealership and website to website looking at cars you can't afford. You’ll know your dollar number so you can shop within your means, saving you time and effort.
One of the most beneficial aspects of pre-approval is simply knowing. When you know that interest rate you’ve been pre-approved for, you can shop for a car more intelligently. That’s most evident in interest rates for financing.
Let’s say that your flawed credit history means you’ve been pre-approved on a 60-month term. You’ve selected the perfect compact SUV for your needs and budget and you know what your interest rate is going to be. The salesperson might ask, “Do you want to use your own financing, or I can see if I can get you a better rate?” What do you say?
Of course, let the salesperson try! With a pre-approval, you aren’t locked into the deal until you’ve signed on the dotted line. Whether the salesperson comes back with a better rate or not, you can be confident you’ll be taking your new car home.
Auto financing pre-approvals are a great idea for shoppers with great credit, but even more so for those with no credit or bad credit. Car dealerships have access to low- or zero-interest loans from the manufacturer but aren’t as well equipped for bad credit car buyers. By getting pre-approved, you can tap into the best rates and terms for your specific credit situation before you visit the car lot.
Get pre-approved today!
Go to our free application and apply for a pre-approved car loan just 3 minutes! Regardless of your credit score, we can help get you a great car within your budget.
Decide whether or not you want to make a down payment and how much your down payment should be. The down payment is a percentage of the purchase price paid upfront. Even if it's just a few hundred dollars, a down payment can help you secure a better deal.
Do you have a cosigner ready to sign or will you be the only name on your car loan agreement? A cosigner is a trusted friend or family member who agrees to share responsibility for your loan. A cosigner can help you get more favourable auto financing rates because the level of risk for the lender decreases. However, a cosigner isn’t a viable option for everyone and you can still get approved without one.
There’s one thing you should be mindful of if you don’t need a car immediately but plan on applying for auto financing in the near future: Your credit score.
A credit score is kept on anyone who has received a credit card or a loan. Your credit score is included on your credit report, a document—administered by credit bureaus companies like Equifax and TransUnion—that contains information about your credit history and financial behaviour.
This information is provided to lenders, employers, landlords and more. This report allows a company or lender that is considering granting an individual a loan to assess one’s ability to pay the money back.
Credit scores in Canada range from 300 points to 900 points. The closer you can get to 900, the easier it will be to secure the best auto financing rates.
If you don’t know where your finances stand before applying for auto financing, it’s best to do some digging to figure out where your credit score lands. You can download your credit report and learn your credit score for free at sites like Borrowell.
If your score is poor or fair, you might want to look at ways to improve it. Here are a few quick tips:
With a few small adjustments, you could see your credit score increase in as soon as 30 days.
Monthly installments on a car loan can help you improve your credit score for more reasons than one:
Essentially, refinancing a car loan is like purchasing your vehicle all over again. There’s no price negotiation though because you’re already the car’s owner and the balance of the car loan is what you still need to pay.
When you refinance your auto loan, the lender qualifies you for credit and assesses your vehicle’s eligibility for financing. Once you’ve been approved, the lender issues a new financing contract for the amount owing and then pays out your current car loan in full.
If you’ve been able to improve your credit score since taking out your car loan, you may be able to finish your term with a better interest rate!
Canada Drives can get you pre-approved for your next car in no time. After completing a quick online application we’ll match you with a local dealership who will show you vehicle options you are pre-approved for. Just pick the car you want and drive away! No more fear of rejection or wasted time shopping for vehicles outside your budget.