A bad credit score can be a significant discouraging factor when you want to buy a new car and are looking for financing options. Getting a car loan with favorable terms can be quite tricky if your credit score is not high. While some lenders may only consider you for subprime loans, which have non-favorable terms and high payments, some may outright reject financing due to a bad credit score. Does that mean you will be forced to buy a car by paying the full price? According to a leading car loan advisor from Canada Wide Vehicle Finance, Canada’s best vehicle loan company, it is not necessarily a case. Even if your credit score may need some work, it is still possible to find a car loan that does not break your monthly budget. One incidental way to improve your score? Making consistent payments towards your car loan! Here are a few tips to make sure that you get a car loan in spite of your bad credit.
Before starting loan shopping, it is vital to know your credit score. There are numerous websites that can provide you with your credit score. Many banks also offer a soft credit check facility on their app, right at your fingertips. Check your credit score before you go loan shopping to know where you stand.
Research about terms like Annual Percentage Rate (APR) in the case of new cars or even if you are buying a used car, refer to the Kelley Blue Book value of your preferred car. Many loan websites provide several resources to get an estimate on vehicle costs, interest rates, etc.
It pays to check with multiple lenders before finalizing one. Check with various lenders and compare their quotes before choosing one. Remember that in spite of what one lender says, even with a tarnished credit score, some other lender can get you a better deal. So don’t stop hunting until you find a good deal.
One of the most powerful tools to get a great deal on a car loan is to pre-qualify for a car loan from your bank or credit society. If you can get a pre-qualification, you will stand a chance to negotiate your rate with your auto loan provider. Although getting a pre-qualified loan from a bank can be difficult with a bad credit history, it is not impossible, and you may still be able to qualify for a reasonable rate if you have a good relationship with your bank.
Once you have decided to finance through a dealer, always make sure that your terms are final. In many scams, the dealers later introduce higher payments or increased down payment citing that the financing was incomplete.
Shop loan terms and not monthly payments
Although lower numbers against the monthly payment column look good, it attracts more tenure, which means that you are paying in interest rather than in principle and makes no sense to do so. Instead, opt for the lesser term and choose to pay off the loan faster rather than paying interest.