Despite modern public transportation, many Canadians find that owning a vehicle is a necessity. Work and other family needs often require scheduling flexibility and that is difficult to obtain without a personal vehicle.
Fortunately, even consumers with imperfect credit can finance a new vehicle and in some cases, this might even be an excellent opportunity to improve their credit rating.
Buying a New Car May Be a Better Investment
While purchasing a new vehicle may sound extravagant, many have found that a new car is a better financial investment than a used car. A used car may allow the buyer to avoid financing, but repairs and higher refueling costs on less efficient cars quickly add up.
A new or newer car is far less likely to require immediate repairs. In many cases, manufacturer warranties can eliminate the need for out-of-pocket repair expenses altogether for the first several years after a car is purchased. Regular preventative maintenance can mitigate repair costs, but once the warranty has expired, all costs will have to be paid by the owner. Newer cars also offer improved fuel efficiency options and overall improvement of gas consumption over older models.
New cars can also be cheaper to insure. When calculating premiums, insurance companies consider a variety of vehicle information, including likelihood of theft and anticipated repair or replacement costs. Additionally, safety features are important considerations for insurance providers, and newer cars have many more stock safety features. To maximize this benefit, drivers should consider signing up for a driving monitor through their insurance company that will reward them for safe driving habits.
For people with less-than-perfect credit, financing a new car may actually improve your credit rating, and many creditors compete to provide a car loan for bad credit shoppers.
Getting a Car Loan For Bad Credit Is Easy
Most car buyers assume that it is difficult or impossible to get a car loan for bad credit. However, unlike other types of major loans, car loans are much easier to qualify for. They are shorter-term than property or real estate loans and provide less risk for loan providers.
A significant credit factor is collateral, and financing a new deal provides inherent collateral for the loan. Even if you do not make payments, creditors can be sure that they will not be left with nothing. In the worst case scenario, they can repossess the car to avoid losing money. This makes creditors much more comfortable about offering a car loan for bad credit than other types of loans.
How Car Loans Can Help Poor Credit
What many consumers don’t realize is how purchasing a new car, even with poor credit, can actually help improve your overall credit profile. Buy financing your new car you create an opportunity to develop good credit history to mitigate negative marks in your profile.
If you are hoping to improve your credit score by financing your car, consider the following tips:
– Confirm your credit rating and profile before you go.
– Ensure that your creditor’s standard practice is to report to both of Canada’s credit reporting agencies, Equifax and TransUnion Canada.
– Review your budget ahead of time, and don’t agree to payments higher than what you can afford.
– Pay more than the minimum each month to reduce interest.
Buying a new car is a complex decision. A poor credit profile does not have to keep you from the vehicle you need. By making smart, informed credit choices, you can get your transportation needs met without breaking your budget.