Let’s face it, financial institutions have some rather difficult guidelines for anyone to meet in order to qualify for a loan. If you have a history of bad credit, the guidelines become more difficult. In fact, too many Canadians resort to having to purchase anything but a quality vehicle because they either don’t qualify for a vehicle loan or are faced with higher than normal payments and debt loads that are nearly impossible to manage.
However, there are ways around this potential problem and if you are a resident of Canada with bad credit, these tips may be all you need to get you into that new or nearly new car or truck.
Tip #1 – Rent to Own Option
Although these kinds of programs are typically used with older vehicles and are associated with higher interest rates, they can help you out in a big way. If you choose the ‘rent to own’ option, make sure your positive, on-time and reliable payment history is recorded and reported to credit bureaus such as Equifax or Trans Union. What this does is improve your credit rating – but only if your repayment history is reported to them. The next time you go to a financial institution for any kind of loan, this history should make you a better candidate for that loan regardless of what credit rating you had prior to the rent-to-own option.
Tip #2 – Cash Purchase
Not every Canadian with bad credit is going to be able to do this, but for those who can – here’s the most effective way to get past your credit history at the bank. Buy the car or truck you are looking at with cash. This completely avoids having the financial institution – or car dealer you are buying a car from – have you go through the application process and the discovery of your bad credit rating. Depending on how much cash you have will determine the quality of the vehicle you can purchase and brand new, top of the line will very likely be out of reach.
Tip #3 – Internet Car Loans
This is a quick and easy short cut for most. Online car loan services, such as BC Auto Credit, will allow you to apply for vehicle financing through the internet regardless of your credit score. Bad credit? Not a problem with internet car loan services.
Tip #4 – Lump Sum Payment
Suppose you have a fair amount of savings stashed away somewhere. If this is your situation, you may be able to get around the bad credit rating attached to your name by making a rather large down payment. This reduces the amount of risk that the car dealer or seller will consider you having based on your credit rating. If you don’t have a lot of savings, this will not be a sensible option for you to consider.
Tip #5 – Rebuilding Your Credit
If time is on your hands, you can slowly improve your credit rating through one of many Canadian credit repayment programs. Essentially you end up making scheduled payments on an account which may involve a secured credit card. The on-time payments earn you a better credit score. This opens the door for you to apply for a vehicle loan at a financial institution and with a better credit rating, your acceptance probability increases.
Tip #6 – Non-Prime Dealership Departments
If you have a low credit score, or have no score as you have never used any form of credit, some automobile dealerships have ways to assist you. They have what is known as a non-prime service but they are not easy to find and not everyone qualifies. In fact, many hard to finance customers cannot be helped based on qualifications required.
As you can see, even if your credit is less than perfect, there are ways to still get that car or truck you have been looking at. The bottom line is that while banks have many qualifications one must meet for a vehicle loan, bad credit is usually a problem. For other online services, like BC Auto Credit, your credit history is not as much of a concern as getting you into your new vehicle is.