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Busting Myths: 6 Misconceptions about Car Financing

by | Jun 21, 2022

It has been impressed upon us that borrowing is bad. This foundation makes us shy away from applying for a loan. 

Some people think it is a financial trap designed to bait us into buying something that we can ill-afford. However, this perception is erroneous, and this article will enumerate the different misconceptions about loans. Here are some of them:

Myth 1: You Cannot Get a Car Loan without Credit History

This myth is so vast that it has become a pearl of conventional wisdom. Several, if not most, of the lenders out there require credit history before you apply for car financing. Many of us do not have it and do not apply for such loans. We assume that we will not qualify for one.

However, we do not know that there are certainly companies out there that can give you car financing, even if you do not have a credit history. One of the reasons we are afraid to avail of this type of loan is that our credit history is not established. We are told that we will not qualify for a loan if we have no credit history.

Myth 2: You Need a Large Income to Get an Approval

Fortunately, this is another mistaken belief that has been dispelled over time. 

The mere fact that some people with large incomes may not be approved for a loan while a lower-income person may be authorised makes many think that your payment has a lot to do with whether you will be approved for a car loan.

The truth is that personal income level has nothing to do with whether you will qualify or not. The most important thing is to guarantee that you can afford the monthly payment.

Myth 3: You Need a Large Down Payment

A substantial down payment will help immensely, but it is not necessary. If you have an ample amount of money lying around, then all the more you will be approved, but if you do not, then you can still be approved. You need to make sure that you can pay the monthly installments.  

The proof is in the pudding. Nowadays, you can also get a car loan without down payments and get into the driver’s seat.

Myth 4: You Can Only Get a Good Interest Rate If You Have a High Credit Score

Many of us believe this is the case. We think that only those with good credit scores are entitled to a low-interest rate. This belief is not true at all, as this is a misconception.

If you have a bad credit rating, do not lose hope. You can also get auto financing with a reasonable interest rate and get a good refinance auto loan. You are given better options than those who have no credit rating.

The credit score is still relevant in determining car loan interest rates. It is a fact. You can still get approval for auto financing with a low or even bad credit score, but you will pay more. An excellent credit score can help you get the lowest interest rates. 

This belief is one of the primary reasons many people with low credit scores do not avail of car financing. They believe that it will be too expensive. The good news is that now you can get car financing even with a low to bad credit score.

Myth 5: You Need a Co-Signor If You Have Poor Credit

If you have poor credit or no credit history, you will not be approved for car financing. It is another widely-believed myth. You can get auto financing with no credit history.   

Delaying the application because you think you will not be approved is a mistake. You can even avail of alternative car financing. You are automatically given a higher interest rate if you have no credit history.    

Invest in yourself and get a good credit rating. Once you have a good credit rating, the interest you pay for financing your car will be lower, allowing you to put more money for other uses.

Myth 6: You Cannot Get Approval If You Were Turned Down Somewhere Else

The belief that you cannot get a loan if you apply somewhere else is false. We think that if we apply for a loan in one company and get turned down, we cannot go to another company. We believe that the first company has already made a negative mark on our credit reports.

We think that the second company will also see this mark and will be hesitant to approve us. We let the belief that the first company has already rejected us influence our decision to get a loan from another company.

However, this belief is not valid, far from it. It is easy to secure car financing with no credit score or bad credit score. You need to know where to get it.

If you have a bad credit score and were turned down elsewhere, do not think it is the end of the road. There are still companies willing to give you a car loan regardless of your past credit history. You need to shop around. 

If you apply for another financing facility, you may be afraid of being turned down by another company again. You need to understand that the credit score you have is what is essential to the company, not your past credit history.  

The company will consider your current credit score. You will have to pay for your past mistakes. However, you can still get approved with a bad credit score.

Conclusion

It is easy to get car financing with no credit history. Many have done it. The secret to getting auto financing with bad credit is to shop around and find the correct financing entity that can provide you with the loan package you need.   

There are still viable car loan lenders that will give you the car financing you need. It is also important to be wary that your credit score will determine the interest rate you will pay for the loan. A good credit score gets a lower interest rate. It is why it is crucial to improve your credit score.

Take a leap of faith and apply for a car financing through Get Approved Canada. We will help you get that much needed funds. Contact us now for more information!

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