In general, people with a bad credit history have a hard time getting loans. However, if they know how to take advantage of the right opportunities, things can be very different.
In this article, we will teach how to get a car loan, even with bad credit and no down payment. Also check out how credit scores work, how to improve them, and the best banks to get loans with bad credit!
What is Credit Score?
As in other countries, the Canada has a credit scoring system that measures how reliable a person is when it comes to paying their debts.
Called Equifax credit, the measurement ranges from 300 to 900 points and you can check yours using tools like Borrowel, which also offers services such as financial education and product recommendations.
According to Equifax, a score of at least 660 is considered good and can qualify most people for most loans. However, people with scores below that will have a hard time.
How Can I Improve My Credit History?
Obviously, having a good score is the best way to get a car loan, so if you have a bad history, your best option is to start rebuilding your score gradually.
And the best way to do this is, of course, by regularly paying off the loans you have in your name. You can even take out smaller loans, showing lenders that you are a trustworthy person.
Is It Possible to Get a Car Loan with a Bad Credit Score?
But although this seems quite logical, there is a clear problem there: how to get a car loan with a bad credit score?
As you may have already understood, having a bad credit score means that your credit options are extremely limited, but it's not like there are no alternatives.
Even if you have a bad credit score, it is still possible to be approved for a loan through a dealership or retailer, as long as you can prove that you earn enough to do so.
Typically, an income from $1,800 per month already qualifies a person for certain loans, but there is no set rule for this. The most important thing, in these cases, is to prove a fixed and stable job.
But what about the Entrance?
When it comes to loans, the down payment serves as a form of protection for creditors. A down payment of approximately 20% of the total value of the vehicle is usually required, enough to cover the difference between the original value of the car and its resale value.
This way, even if there is a problem and the creditor ends up getting the car back, he will not be left out of pocket.
Several companies even offer loans with no down payment, but in these cases the interest and fees on the installments end up being much higher.
How to Get a Car Loan?
Currently, one of the best ways to get a get a car loan, even with bad credit and no down payment, is through online retailers. Most of them have pre-approval programs that make life much easier for people in this situation.
Check below how to buy a car with pre-approval through Canada Drivers:
- All you need is to access the Canda Drivers website;
- Click on “Get Pre-Approved”;
- Provide data such as vehicle type, budget, credit score, etc.;
- Once you're pre-approved, simply browse through the available cars and choose yours.
Obviously, this is not a traditional loan, but your chances of leaving with your new car even with a bad score are much higher.
Furthermore, this is just one of several platforms in the country that offer this type of service. Another well-known name is AutoLoans.ca.
Banks That Give Loans to People with Bad Credit
But if you prefer, there are several personal loan providers in Canada that may fit your needs very well. Check out some of them and the solutions they offer below!
Scotiabank
With loans of up to 5 years, the Scotiabank provides personal credit lines and loans of up to $75 thousand. In addition, customers have full access to their funds through the mobile application, Online Banking, card and check.
All a person needs to apply is an identification document and proof that they are employed.
BMO
THE BMO enters as the eighth largest bank in North America, considering its assets. One of its highlights is the availability of credit for people with different financial profiles, as long as they provide the necessary documents.
Just like with the previous bank, to get a loan the most important thing is to provide documents that prove that you are employed and able to make payments, such as a letter from your employer or recent pay stubs.
TD Bank
Already the TD Bank stands out for its loan plans targeted at specific needs.
If you need a loan to buy a car, just choose from the options TD Auto Finance or Private Sale Vehicle Loan. Each one has its own particularities, but the platform provides a calculator to help you choose the best plan for you.
Conclusion
As you have seen, it really is possible. get a car loan in Canada even with a bad credit history and without making a down payment. However, there are several options and the buyer must always be careful to choose the one that will bring him the most benefits!
