If your old car is nearing the end of the trail and it’s time to replace it, you’ll possibly need to get a BC auto loan to finance a new car. However, if you’ve had some bad luck and gotten behind on your bills or maxed out a credit card, you may have damaged your credit rating. The thought of applying for a British Columbia auto loan may seem discouraging and intimidating.
However, a car loan is much smaller than a home mortgage, so it’s a less significant financial risk for a lending institution. Some lending establishments are willing to provide bad credit auto loan financing, especially if you can show that you have a stable income and can verify that you have a good income to debt ratio.
What’s A Credit Score?
A credit score is a prediction of the likelihood that someone will repay his or her debts. The higher rating you have, the easier it is to get a loan. However, if you have no credit history or a poor track record of paying your debts, your chance of getting a BC auto loan approval is greatly reduced.
How Are Credit Scores Calculated?
There are a number of things that go into calculating your credit score.
• The amount of your debt
• If you pay your bills on time
• The number of credit cards you have and the length of time you’ve had them
• How many inquiries prospective lenders have made concerning your credit score
• If you have a lien or judgment against you
• If you’ve filed for bankruptcy
Using this criterion, your credit score is ranked between 300 and 900 points. A rating of fewer than 650 points implies you have bad credit. BC auto loan financing becomes more difficult, and you’ll have a challenge getting auto loan approval.
How Can I Decide If I Can Afford My BC Auto Loan Payments?
You should figure out in advance what you can afford monthly. Only you know if you can afford a car payment, based on all your expenses. However, BC auto loan lending agents generally won’t approve more than 25 percent of your monthly income.
Use an auto loan calculator to estimate your payments. With this tool, you can compare monthly payments based on the total price of a car, the size of your down payment and interest rates.
If you’re planning a future purchase, you can use the calculator to look at various scenarios. You can estimate what your payment would be with no down payment, a small down payment or a larger down payment. With that information, you can save for a down payment that will reduce your monthly payment to a reasonable level.
Good News For Bad Credit Auto Financing
Even with bad credit, auto loan financing is possible. A bad credit score can affect your ability to get a BC auto loan. That doesn’t mean you can’t get a loan at all; it just means you will need to be more creative.
Lenders specializing in bad credit auto loans place more value on your current situation and less importance on your credit history. Moreover, the bad credit auto loan financing industry has become more and more competitive, and they want your business.
You can still get a BC auto loan with less than a stellar credit rating and getting financing for a new or used car is one good way to help re-establish your credit rating.