Let’s face it. Living life in North America without access to a car you can count on us pretty hard to imagine. But few of us can buy a dependable vehicle for cash. Financing the purchase of any car, new or used, is going to be a necessity for just about everybody and those with bad credit may need to use a bad credit auto financing dealer.
Options for Financing
You shop carefully, find an auto that fits your needs, and let the dealer know you’re interested in buying the car. If you’ve got a pre-approved loan from your bank or credit union, you can negotiate with the dealer until you get the price you want. Alternatively, the dealer may offer you financing, setting up a loan with a specific number of payments and a specific rate of interest. All of this goes smoothly if you enjoy a good credit rating.
Bad Credit Complications
If your credit rating is not good, however, financing a car becomes more complicated. Just about every adult Canadian who’s ever borrowed money or used a credit card has a credit rating. Your credit rating takes the form of a numerical score, determined by reports made about you to one of Canada’s two credit rating bureaus, Equifax Canada and TransUnion Canada. A perfect score is 900. But this number drops if you’ve ever missed a payment, been late in paying a bill, or have approached the borrowing limit on your credit cards; it goes without saying that bankruptcy lowers your credit score radically. Once your score dips below 680, businesses become nervous about lending, concerned about your ability to pay them back promptly.
Bad Credit Auto Financing
It isn’t difficult to find yourself saddled with a bad credit rating. Life is full of unexpected circumstances. An accident or illness in the family may force you to leave your job, a move to another province may result in a late payment, a friend you’ve co-signed for may be unable to honor a debt: each of these will lower your score. When you apply to your bank or credit union for bad credit auto financing, you may find yourself quickly rejected. The auto dealer who will welcome customers with scores in the 700s may very well refuse your credit request. You need that car to get to work and to care for your family. What are you going to do?
Good News for Bad Credit
Fortunately, there are good options for folks with bad credit scores, and you don’t have to risk life and limb dealing with payday loan establishments, pawn shops, and loan sharks. There are legitimate and ethical lenders willing to provide you with auto financing. It’s important to recognize that the interest rates on bad credit auto financing are probably going to be higher than those offered customers with higher credit scores. However, with application and effort, these loans can be obtained. Look online for lenders who specialize in bad credit auto financing. Be prepared to provide some personal information: you’ll need to have proof that you have a job or a fixed annual income, and that you are a current resident of Canada. Be sure that you get all the details of the loan in writing, and that you read the contract very carefully before you sign it. And once you’ve purchased your car and begun making payments, make up your mind to be prompt and regular in repayment. Before you know it, you’ll have improved your credit rating, insuring ease in future borrowing.