Where Can You Apply For a Car Loan?

Life without a car is a struggle for most people. We need cars to get to work, drop off our kids at school, and pick up the groceries. But cars can be expensive, which is why getting a car loan to purchase a vehicle can be a huge help. Most people are familiar with banks and credit unions for getting a loan. These traditional lenders offer loans and credit to individuals with established employment and credit history. To qualify for credit at these institutions, you have to provide proof of monthly income and steady employment. You must also have good credit history and a high credit score.

What Can You Do to Build Up Credit in Canada?

Establishing the eligibility requirements for loans from traditional lenders takes time. When you have no credit history in Canada, some financial institutions will offer you credit, but you may be subject to stricter rules. When you have little to no credit history, the cost of borrowing money also tends to be more expensive. Here are some ways you can help build your credit history and improve your credit score.

Apply For a Secured Credit Card 

In order to qualify for a secured credit card, you must first make a deposit with the lender. If you would like to have a credit limit of $1000 on your card, you will need to pay a security deposit of $1000 to the lender. Keep these points in mind:

• Pay your credit card bills on time. 
• If you default on your payments, your security deposit will be used to pay off your balance.
• Missed payments will negatively impact your credit score. 

Get a Bad Credit Loan 

If you don’t have the assets to secure a loan, you can apply for a bad credit loan. There are many non-traditional lenders that offer these loans. However, the main drawback is that the costs are high, with interest rates ranging from 18% to 46%. This is much higher than the typical prime lending rates of traditional banks. When you leverage the benefits of a bad credit car loan by applying for a modest sum and paying it back on a regular schedule, you can both increase your credit score for your next loan application and get yourself a vehicle.

How to Apply For a Bad Credit Car Loan

When you are new to Canada, applying for a bad credit car loan gives you the opportunity to start building up your credit. Here’s how to do it:

STEP 1 – Find a Reputable Dealership

• Choose a dealership that has a large inventory of cars for a better selection.
• Find out if they work with several financial lenders for a competitive interest rate.
• Check that your lender reports the transactions to the credit bureaus.

It is important that the lender reports all transactions to either Equifax or TransUnion so that you can build up your credit score. In some cases where a lender will not offer a loan, the dealership may offer a private loan to help you purchase a car.  This kind of loan is helpful, but it does nothing to build up your credit. 

STEP 2 – How Much Can You Afford?

• Figure out your monthly budget to see how much you can pay for a car each month.
• Use our car loan calculator to find the maximum price for your car.

STEP 3 – Choose Your Car

• Find a car that is practical and fulfills your needs. 
• Choose a vehicle that falls within your budget.

Interest rates for bad credit car loans can be as high as 46%, so it is best to keep your costs low. To check out our inventory and prices, click here.

STEP 3 – Gather Your Documentation

Most lenders will require the following personal documents:

• Checking and savings account statements
• Proof of employment (letter from your employer or several pay stubs)
• Income statements or pay stubs
• Government-issued ID

STEP 4 – Get Pre-Approved for Your Loan

Once you have selected your car and have your documents in order, you can get pre-approved online! The process is quick and easy, and you may even get approved the same day. 

If you have any questions about this process, please contact us!

What Is a Good Credit Score?

Once you have your loan, you are ready to start building your credit. You want to aim to build a credit score above 660. The credit bureau, Equifax, classifies a credit score according to the following scale:

• 660-724 = Good
• 725-759 = Very Good
• 760+ = Excellent

If you have a score above 660, you are viewed as a lower-risk borrower and qualify for better loan terms from a traditional lender. Individuals with scores below 660 are generally viewed as having poor credit.

What to Do For a Good Credit Score

If you want to build good credit, keep the following points in mind:

• Make your bill payments in full. 
• Check the due dates on your bills and pay on time. 
• Plan accordingly and pay your bills a few days in advance of the due date. 
• Keep in mind that payments are not processed on weekends. 
• Any late or missed payments will reflect negatively on your payment history and lower your credit score. 

What Will Impact Your Ability to Build Good Credit?

1. Not making your bill payments on time! This includes the following:

• Credit card bills
• Utility bills such as gas and electric
• Loan repayments
• Cell phone bills
• Bad credit car loans

1. Submitting multiple credit card applications over a short period of time.

1. Having a high credit card balance. Higher balances that are close to your credit limit may reflect poorly on your score. 

Get A Bad Credit Car Loan Today

At Insta-Auto Solutions, we have a full inventory of quality used vehicles on our lots. If you are ready to purchase a vehicle and start building your credit in Canada, get pre-approved for a loan now.