Can I Get a Car Loan with Bad Credit? – Cars Used Ontario

Bad Credit Car Loans

When it comes to people who need to buy a car and but they know they have bad or no credit, it’s the burning question.

How do I get a car loan when I have bad or no credit?

First of all the “how” isn’t quite as daunting as it may seem, there are many dealerships and outside companies who are willing to help you. The part that people give little thought to is asking the question “what …” as in:

What am I getting into? (with respect to the loan process)
What are my payments?
What are my interest rates?
What are my expectations as far as a car that will fit my needs?

Ok … let’s handle each one of these and by the time you’re finished reading this post, not only is the “how” going to be the breeze, but, you will be that much more knowledge about the “whats.” My whole goal here is to help you avoid a lot of heart ache and the expensive pitfalls that others are trapped into … so what do you say we get started!

What am I getting into? (the loan process)

The initial process is very straight forward, you fill out a free application for bad credit auto loans, hit the send button and off it goes to a lender loan specialist who will send back a “conditional approval for you!.” The conditional approval does NOT mean you have a loan. All it means is that the lender is willing to advance you funds to purchase a vehicle, however, you must provide them with some supporting documentation and the specs on the vehicle.

When the “conditional approval” comes back, then an appointment will be set up with the dealership or company you initially sent the credit application through. At the time this appointment is set up you will be advised to bring the following documents with you:

1. Driver’s License
2. Pay Stubs (at least 3 consecutive and not later than 60 days old)
3. Void cheque
4. Copy of a bill with your name and current address on it (you aren’t always asked to provide this, it depends how long you have lived at your current address)
5. Deposit – this is the hold the vehicle so that it can’t be sold out from under you. It is returned to you when you come back to pick up your car

When you go for your appointment with the above documentation in hand, it is at this time you will walk the lot with the loan specialist at the dealership. They will advise you at that time what the lender is willing to advance you in terms of a loan and you select a vehicle that will work for you within the range the lender has set.

Once you have selected the vehicle, the loan specialist at the dealership will send to the lender all the documentation you provided and the specifications of the vehicle you selected (ie, year, make, kms, price). Once the lender goes over the paperwork they will come back with a payment schedule, down payment (if required) and if there are any other additional pieces of supporting paperwork they need, it will be asked for at that time.

What are my payments?

It is the Lender who sets the payment and limit that you are to work within, not the dealership or the onsite loan specialist. The dealership and/or loan specialist can certainly work with you and talk to the bank on your behalf, but ultimately it is the Lender who makes that decision. The amount the Lender is will to provide you is determined by your credit history, your current credit situation and your current income.

What are my interest rates?

Ok, keep in mind you aren’t buying an interest rate, you’re buying a car, right? But I am going to just tell it to you straight, because to candy coat it isn’t going work.

If you have had a bankruptcy, have collections after you for not paying off any bill or credit card, or have been consistently late in making your payments, DON’T expect that you are going to get the same interest rates as those who have good credit. Reason being is that the credit accidents you have had have now made you a credit risk. Until you get back in the good books again with respect to your credit (ie make your payments on time and stay clear of any further bankruptices etc) your interest rate will be high. How high depends on your credit situation and what the Lender is willing to do to work with you.

What are my expectations as far as the car goes?

Keep in mind there is a difference between “want” and “need.” Remember it is the Lender who provides you with the cap to work within. What you need to do is determine what sort of vehicle do you need that meets the Lender’s objectives as well. It’s important to keep that in mind the couple of objectives that we are working towards:

1. to get a vehicle that you can afford, that will meet your needs
2. to rebuild your credit

You are not married to this car and keeping it for the rest of your life. Right now this car is a means to get you from A to B AND to rebuild your credit. Having said that, after 18 months or so, there is the possibility of being able to get you out of this car and into something else and at a better interest rate. For now however, just keep in mind your two objectives above.

I’ve seen so many people come into me with the expectation that just because they have had a few credit accidents that they are entitled to the same rates as someone who hasn’t. Granting of credit doesn’t work that way. Unfortunately credit accidents happen to all of us, however, if you keep the objectives in mind when you are car shopping, it puts things into perspective for you and makes the process a little easier.

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