A 5-step process on getting a car loan with bad credit. This involves researching your desired vehicle, looking into loan vendors, and sticking to good financial habits.
Buying a new or used car is an exciting experience to customers, but adding a bad credit score under your name can be souring. The growth of public transit, taxis, and car sharing apps like Uber and Lyft add more options and accessibility to go anywhere we want. However, more and more Canadians are purchasing vehicles to give themselves that extra convenience that many of us want.
Truth of the matter is that options will be limited to someone who has a bad credit score. But all hope is not lost. There are still lenders who are willing to grant car loans with bad credit. These 5 steps mentioned below will show you on how to be one step closer on driving the car of your dreams.
Step 1: Find the Car that you NEED
The word “Need” should be the main focus when planning to purchase your car. This involves some deep reflection and thought if having a car is essential. First, consider why you want to buy a car in the first place; is it for your business, commute to work, or bring your family around for errands? The size of the car is another factor to look into as it will lead to overall high costs due to gas mileage. Lastly, the maintenance of your purchased car will have an impact on your future expenses so make sure it can be managed further down the road.
Step 2: Improve Your Credit Score
Not only improving your credit score brings higher chances of receiving a car loan, it also puts you in a better financial situation. There are ways to go about it such as being aware of your credit history, paying down your debts, and create a budget plan. If you want more information, just read our article on A Definite Guide to Build Up Your Credit Score. Once you have a desirable credit score, you can afford a comfortable down payment and a manageable interest rate.
Step 3: Research Loan Vendors
This step is not too difficult to do as there are many vendors available that can provide loans in different situations. However, not all vendors cannot accommodate to your needs in purchasing a vehicle. So do your homework, research on vendors that are credible and offer a fair monthly payment.
Step 4: Purchasing Your Car
You’re one step closer in getting your new car and can’t wait to leave with it. Do not let your guard down when reading and signing the loan application. Many buyers are surprised of signing the application and realizing they bit off more than they can chew. So do yourself a favor and take time to read it. Don’t be afraid to ask questions. Don’t be reactive when the vendor or car dealer are pressuring you to sign. Lastly, don’t be afraid to walk out of the deal. Once you sign the loan application and contract of purchase, there is no turning back and you are responsible to carry the burden of paying the expenses.
Step 5: Making Payments on Time.
Congratulations, you finally made it all this way to purchase the car of your dreams, but the journey doesn’t end until your car is completely paid off. Make sure you are keeping track of your car payments and other expenses to avoid lowering your credit score. If you are having a difficulty time with your payments, contact the loan vendor immediately to see what options are available to your situation.
Having a bad credit score should not keep you from making big and important purchases. By following the 5 steps mentioned above, you will have greater chances on purchase a car with little or no issue.
Check out more resources on our Ultimate Guide to Bad Credit Score