A car is now part of our basic needs. When it breaks down or gets involved in an accident, life becomes difficult. The only solution is to get a new one when having some good money on hand or a good credit score. Fortunately, it is possible to get a car loan today even when you have bad credit. Companies realized that many people were missing out on getting the car of their dreams just because of bad credit. So, today you are going to discover how you can get a car loan with bad credit.
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What does it mean to have a bad credit score?
Your credit score is a method for lenders to determine your ability to pay bad a loan. It is a three-digit figure between 300 and 900. Having a bad credit score means that it is very risky to give you a loan. Equifax and Transunion are responsible for compiling the credit score of everyone in Canada. Determining your credit score involves various factors and having a higher number means your credit score is good.
Free tools are available to check your credit score or you can pay the companies highlighted above that compile the figures to get you a copy. The ideal credit score to qualify for a traditional car loan is above 650, and a figure below that means that you only qualify for a bad credit car loan.
Considerations before applying for a bad credit car loan
Budget matters
Before you buy anything, having a budget is very important. This allows understand whether you can afford the item or not. Before you apply for a bad credit car loan, you need to understand how much you can afford to pay monthly. This allows figuring out the right car that will match your budget. Luckily, you can use a free car loan calculator to get an estimate of what to expect.
Consider a used car
To increase your chances of qualifying for no credit check car loans Ottawa, consider a used car. You just have to locate a dealership near you with an inventory of used cars while offering car loans. Having bad credit means your financial standing is not something to brag about. So, opting for a used cheap which is obviously cheaper than a newer model is a smart thing to do.
It is better if you don’t get an expensive car that will make paying back stressful and very hard for you. Besides, your chances of getting approved for bad credit car loans are high are your loan is small. You should keep the loan as much as possible since you’re to get a higher interest for not having good credit.
Pre-qualify online
It is possible to check whether you qualify for a bad credit loan online from your local used car dealership. Apart from saving time, it saves spending money on gas and effort. Besides, you save yourself the frustration and anguish when you discover that you can’t qualify for the loan. The best thing about applying for a bad credit loan online is protection from embarrassment. This is because having bad credit is not something to be proud of.
The knowledge that your credit score is wanting remains confidential between you and the company. Pre-qualifying online allows knowing how much you can possibly get to finance your car purchase. So, this gives you time to check the used car inventory until you shortlist a few options that fit your budget.
Prepare a down payment
Now that you have a budget and a car you want to buy in mind, the next thing is to decide whether to pay a down payment or not and how much you can afford. A down payment I a percentage of the total purchase price that you are to pay upfront. Indicating that you are ready to pay a down payment increases your chances of getting a bad credit car loan. However, it is also possible to get a loan without a down payment. You just have to talk to the dealership for available options.
Having a large down payment is proof that you have the financial capacity to pay the loan. So, do whatever it takes to have a down payment to increase your chances of getting a bad credit loan. The best thing about having a down payment is making you qualify for smaller monthly payments and low interest on your loan.
Proof of employment
Despite qualifying for a car loan with bad credit, you need steady employment. This is proof that you will pay off the loan. Prepare copies of your paychecks, tax returns, and relevant information about your employer. Having proof that you are currently working lessens the risk to a potential borrower. Additionally, lenders want assurance that you will pay off the loan. Regardless of whether your credit score is good or bad having a low debt to income ratio convinces lenders that you can commit to the monthly payments. Getting a dream car is possible today with or without a good credit score. You just have to find a dealership near you that offers online applications for bad credit car loans.
