How to Get a New Car on Bad Credit in Canada

Buying a brand new car offers you more than just the satisfying new car smell. Deciding to purchase a new car can save you from many of the headaches and risks that come from buying a pre-owned car. Plus, a new car comes with the added bonus is being able to pick from all of the bonus features and brand-new technology that new cars come equipped with.

Don’t let bad credit stop you from driving a brand new car off the lot and into your garage. Even those with less than perfect credit or no credit can qualify for loans to finance a new car in [cf_geo return=”state” default=”Your State”]

instantly.

Benefits of Buying a New Car

Safety and Security

Buying a new car comes with the peace of mind that you are buying it in mint-condition, with brand-new factory parts that have passed the manufacturer’s inspection. An added bonus to buying a brand new car is that you will have a car with little to no mileage, aside from those accrued from dealership test drives. Plus, there has been little wear and tear on the interior and exterior parts of the vehicle. All parts of the car would be covered by a manufacturer’s warranty for a certain period of time, and you can purchase an extended warranty to cover those that aren’t included.

Manufacturer’s Warranty

Buying a brand new car means that your vehicle will have brand new parts on the interior, exterior, and under the hood of the car but even normal daily driving causes wear and tear on your car parts. Most manufacturers offer warranties to cover the cost of repairing mechanical or electrical issues, or to cover the cost of replacing parts that go bad within a certain amount of time or mileage. To further protect your new car, most dealerships also offer extended warranties on new car purchases, which help cover the parts of your car for a longer period of time.

So Many Choices

You can literally build the car that you want that’s loaded with the features that you want when you buy a new car. You can choose the make and model, but also the color of the exterior, pick from upholstery choices, select additional features like sunroofs, spoilers or navigation packages. The options are endless! Plus, purchasing a new car means that you can pick a car with the newest technology and advanced features. To learn more about the pros and cons of buying a new car by, CLICK HERE. 

What you need to qualify for a bad credit auto loan

Even if you have less than perfect credit, you can finance a new car through a reputable lender.  You ONLY need to meet THREE simple qualifications to apply for a new car bad credit loan:

1.     You have a valid driver’s license
2.     You possess car insurance
3.     You make at least $450 per week in income

If you meet these three criteria for acceptance, you can be approved for an auto loan in [cf_geo return=”state” default=”Your State”] in just minutes!

Why finance a car

While some may have extra cash for a down payment, most don’t. Financing a vehicle helps pay off the cost of the car over a period of time by dividing the amount owed plus interest paid to the lender into more manageable monthly payments. CLICK HERE to learn how to build your budget and calculate your car payments.

There are several reasons to finance your next car purchase. Firstly, financing a new car gives you more options and the freedom to pick from a broader range of vehicles. You can rest assured that you will be able to pick a new car that is not only safe and reliable, but one that serves the needs of you and your family based on your budget.

Secondly, financing a car is actually a good way to rebuild bad credit, despite the fact that you’re adding an open line of credit to your credit history report. Building good credit for yourself, of course, is contingent on making your payments on time and staying on good terms with your lender. As you make payments on your loan, you will begin to build equity on your car loan, and in turn rebuild trustworthiness with lenders. You will also build a positive credit history for yourself and strengthen your credit score, which will help you qualify for better loans with a lower APR the next time you decide to finance a major purchase.  Click here to see loans available to you!

How to apply for a bad credit car loan

If your credit history report makes you cringe, you are not alone. Bad credit plagues millions of Canadians. In fact, you can click here to review loan options for the car that you want in [cf_geo return=”state” default=”Your State”]!

The best starting point before you even enter the dealership is to invest time in exploring auto loan options. It is in your best interest to shop around for the best loan term and interest rates. You can compare multiple financing options from multiple lenders, so that you can pick the loan that works best for you by clicking here.

Oftentimes buyers with bad credit don’t know where to begin searching for auto loans, or are shy to apply for loans because they don’t know if they will qualify. Many buyers are simply not aware of the number of financing options that are available regardless of credit history. Lenders are willing to offer financing options to buyers who have bruised credit. Overall, select the financing option that works best with your auto needs, financial goals and your lifestyle. Remember that you are never obligated to accept a loan, nor purchase a car, simply because it has been offered to you.

Don’t get caught up in a loan that will take many years to repay. Loans that span for many years may seem enticing because they lower your average monthly payments, but beware these loans can cost you more across the length of the loan, particularly when paired with a high interest rate.

Lenders often view buyers with bad credit as a higher risk, because they have a poor or inconsistent record of making regular payments on a credit account. Unfortunately, people with bad credit may qualify for loans with higher interest rates. A common mistake that buyers with bad credit make is extending the length of the loan to lower the dollar amount that they pay to their lender each month. Buyers fall into this financing trap because they fixate on a particular monthly payment amount that they prefer to pay, and are willing to extend a lease term to pay the figure that they want. This practice is risky, and means that it will take longer to pay back the loan plus you will pay more in interest to your lender. Plus, loans with longer terms tend to take longer to build equity, which means that your credit will rebuild slower than with a shorter loan. And unfortunately, paying a high interest rate for a long amount of time means that you may end up paying more for a vehicle than you may realize, or even build negative equity in the car. See loans that you qualify for here.

It is advisable to pick a financing option that offers both a reasonable interest rate and a shorter term that will let you pay off your loan quicker and won’t have you paying a compounded interest amount. If you must take a new car loan with very high interest rates, try to counter balance the interest cost by paying back the loan across a shorter amount of time. Your car payment might be higher, but you will pay less interest back to your lender which can mean less money that you pay overall for your car.  Calculate your monthly car payments using this free estimate tool. In three simple steps, you can apply for bad credit auto loans in [cf_geo return=”state” default=”Your State”].

How to get your credit report and clean up your credit score

As crazy as it sounds, financing a new car can be a great way to rebuild damaged credit! The first step in laying the groundwork to finance your new car  is taking time to run a basic credit history check for yourself. Sites like Equifax or Transunion offer free and easy credit history reports online. Knowing your credit score will help you estimate the interest rate that may be offered to you by lenders, so that you can better prepare. This will help you determine what new car options fit both your needs and budget. Never rush into a loan agreement without preparation, and take time to review all of your financing options and read through the terms. Use these simple tips to look up your credit score and begin repairing your credit:

• Run your credit history report quickly and affordably on a website like Equifax or Transunion.
• Pay off high interest credit cards and lines of credit as much as you can before you apply for financing.
• Never miss a payment on your loan. Payment history is one of the biggest factors that impacts your credit report.
• Set your auto loan to pay on automatic draft so that you never miss a payment.
• Find ways to continue to reduce your credit utilization by paying down bills, closing lines of credit and cleaning up mistakes from your credit report.  

You can drive the brand new car of your dreams, simply by proactively researching your credit history, figuring out which car you want, and financing your new vehicle with the best fitting loan for you. Follow good practices that can help you secure the car that you want, save money and rebuild your credit, and watch out for bad practices that can cost you more money or damage your credit history even further over time. Remember, your credit score doesn’t mean that you can’t finance and afford a brand new car that fits your budget and lifestyle. Don’t let your credit history keep you from driving the new car that you want, with the right preparation you can drive off the lot in the car, truck, van or SUV of your choice.  Ready to apply for your car loan? Click Here!

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