Bad credit can cause Canadian residents a lot of trouble. They can have problems acquiring cell phone contracts, certain utilities and loans. Once credit is negatively impacted, it is simply a matter of time and and fiscal responsibility before life can get back to normal. However, in the meantime, life can throw unique troubles at the consumer with tarnished credit.
One hindrance that many suffer with is trying to get a car loan with bad credit in Canada. In most cases, the individual desperately needs transportation, and failure to obtain it may mean the loss of a job. In that case, further credit dings are sure to follow. While it may seem hopeless, there are loans available to help those with less-than-perfect credit obtain the financing they need.
Ensure Accuracy of Credit Report
It is not uncommon for those with bad credit to avoid checking their credit report. Normally, they are aware they are in default, and they avoid thinking about it by avoiding the subject entirely. However, this can be detrimental. In the event of identity theft, the consumer will not be aware of fraudulent charges until it’s too late.
Even if identity theft is not a threat, there are situations in which payment information is reported inaccurately. In this case, it is important to make the credit reporting agencies aware of the error. Failure to do so in a timely fashion can make the process of correction long and tedious.
Since the advent of the Internet, it is now easier than ever to acquire credit information. While it sometimes requires a fee, it is a great investment to understand where one stands.
Another benefit of checking the credit score regularly is that consumers can close out old accounts. For example, if a consumer signs up for a credit card but never activates it, it still shows up as an open line of credit on their credit report, and this does not look good for those with bad credit.
Beware of Dealers
Car dealers often have a commission in mind before the best interest of the customer. Therefore, dealer financing is often not as much of a bargain as the consumer could get on their own if they took the time to research to discover what is available for them. Dealers often set up financing that ends up costing the consumer much more in the end with hidden fees and finance charges. While it may be an easy option for those in Canada with bad credit to rely on the dealer, better deals can often be found with the investment of some time.
Get Many Quotes
Just because someone with bad credit receives a car loan approval doesn’t mean they should take it. Rather, they should record the terms and conditions the lender is willing to offer and continue to shop around. While none are likely to offer the types of financing terms those with good credit receive, having quotes from competitors allows the consumer to take advantage of the power of negotiation to get the lowest rate possible.
Avoid Applying for Unrealistic Loans
If there are obvious dents in a credit report, the consumer should avoid applying for financing that is not reasonable. Not only is this be a waste of time and effort, but it also looks bad when there are several hits on the credit report in a short period of time. Ultimately, this can cause a consumer not to be able to obtain financing from anyone, at least for awhile.
Utilize Online Resources
The advent of the Internet has opened up thousands of possibilities, and that stands true to those shopping for optimal financing for cars. Without having to leave the comforts of home, consumers can quickly access financing available. This makes shopping around a lot easier. Best of all, the quotes received can easily be printed to help in negotiating the best interest rate.
Try to Find Short-Term Loans
Those with bad credit should avoid long-term loans at all costs. While the low monthly payment may be enticing, being stuck paying on a seven year loan often means the vehicle is out of the consumer’s price range. Furthermore, over the term, the consumer who opts for the lower monthly payments pay hundreds more in the long run in fees and finance charges.
Save Up a Down Payment
Creditors are hesitant to offer financing to those with bad credit for understandable reasons. They want to make sure they are paid back. Therefore, many require a down payment to let them know the buyer is serious about the purchase of the vehicle. Unfortunately, many looking for a new car with bad credit begin their search with no initial payment. Not only does this make it more difficult to obtain financing, but it also makes the chances of getting a decent rate much lower.
Know Your Budget
Car shopping can cause consumers to want products they cannot afford. While an offer for financing on the car of one’s dreams can be one that is difficult to pass up, choosing to remain ignorant of the level of payment that can feasibly fit into the budget can prove to be a huge mistake. These vehicles end up getting repossessed, and the consumer gets yet another negative mark on their credit report.
Some have found success in creating their budget and obtaining financing prior to finding the vehicle they intend to purchase. By taking this approach, the consumer is already aware of their buying power, and this greatly reduces the chances that they will buy a vehicle they cannot afford.
When searching for financing, it is important for the consumer to carry with them the documentation that will be necessary to process the loan application. Things such as a driver’s license, proof of residency and proof of income will be necessary, and the more readily available these documents are, the quicker the process will go.
Work on Credit Daily
Bad credit is not a death sentence. In fact, it is ever-changing. When bills are paid on time, the score improves. There are also loans that Canadians can get for the sole purpose of improving their scores. By obtaining a small loan and putting it in a savings account, each month a payment can easily be made using little money out-of-pocket. It is just a matter of discipline and self control. While the process may seem like a long one, making on-time payments over time will help those with bad credit improve their scores and be able to obtain car loans at better rates in the future.
As for the present, however, there are options for those with bad credit to obtain financing. Once the best financing is pinpointed, repayment should be strictly adhered to in order to repair credit damage as quickly as possible.
Bad credit doesn’t mean the end of the world, and consumers with less-than-perfect credit should not feel like the wicked-stepchild of the consumer family. When the proper amount of time, effort and research is performed, Canadians with bad credit can receive reasonable deals on financing a new vehicle.