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Getting a Car Loan in Canada With Bad Credit: What to Do

Jul 13, 2021 | Car Loans

In a busy place like Canada, having a car is essential. For one, many Canadians rely on their vehicles to earn a living, so when their vehicles need repairs and replacements, it’s a task that they can’t delay. 

In some cases, replacements and repairs won’t do the trick, so your only solution would be to buy a new car. When this happens, taking out a loan to help you purchase a vehicle may be your saving grace. Sadly, not all of us have good credit to qualify for a credit union or traditional bank loan, but don’t feel disheartened.

Many people with bad credit scores get assistance from loan specialists who can provide them with options for bad credit score loans. This way, you won’t worry about where you’ll get to pull money for your car purchase. 

If you’re curious to know more about how you can get a car loan with a bad credit score, keep reading. Our team of loan specialists has gathered information on how you can get approved for a loan even with bad credit. Let’s take a look!

What Is a Bad Credit Score?

A credit score is a three-digit number that runs between 300 to 900. This score is an easy way for lenders to determine how risky it is to lend you money. With that, there are many factors to consider as to what numbers are to be assigned to you. 

When you have a high credit score, that means you’re using your credit tools responsibly. On the other hand, a lower number means your credit history is far from ideal. The latter leaves borrowers with little-to-no option but to get a bad credit score loan. 

How Do I Qualify for a Car Loan with Bad Credit?

It may be unreal, but yes, it is possible to get a car loan in Canada even with a bad credit score or if you’ve declared bankruptcy in the past. However, you should note that you may not qualify for low-interest rates or the ideal loan terms. Still, you’ll get to finance your car over a period and make payments.

But when you get a bad credit car loan, you should know that you won’t qualify for a loan from a traditional bank or credit union. Instead, you may need to go to a reputable non-traditional lender. Be prepared to deal with high interest rates for your monthly payment since it’s necessary to protect the lender from risky clients. 

What Should I Consider When Getting a Bad Credit Car Loan?

Keep in mind that there are several factors that your lender will consider to know if you’ll be able to pay back your loan. With that being said, it’s a good idea to be prepared.

  • Down Payment: Ideally, you want to save enough to cover your down payment since it shows that you’re financially prepared to pay for a car loan. Remember — the more you save, the better. This can lower your monthly payment, and the lender can give you a lower interest over time.  
  • Financial Statements: Prepare your financial statements so your lender can ensure that you can pay your dues during the term. Ensure that you present several months of your bank history, such as savings accounts, investments, debt, and more.  
  • Employment History: In some cases, lenders may need to know that you’re acquiring steady income. With that, they may ask for proof of employment. 

The Bottom Line: Getting a Car Loan Is Entirely Possible Even with Bad Credit

Many people feel disheartened when they know they have bad credit; they begin to think that they won’t secure a loan to help them with big purchases. Fortunately, some reputable non-traditional lenders offer bad credit car loans to enable individuals with bad credit scores. All you need to do is prepare your financial statements, save enough for a down payment, and have a steady source of income to seal the deal. 

How Can We Help You?

If you’re looking to get a bad credit car loan, it’s best to speak to loan specialists who can give you the best options — that’s where we come in.

Get Approved Canada is a team of loan specialists who can help you with your next auto, personal, or mortgage loan. We work with all credit types to get you the lowest interest rates and provide you with the best payment options. 

Learn more about how we can help you today — apply for a loan now!


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