Yes, of course, you can get a car loan with bad credit! However, there are some things you will want to look out for when shopping and researching online. For this reason, we’ve compiled these 5 tips for those of you reading this who may have bad credit (or no credit) and are looking for a new vehicle.
There are a number of reasons a person could find themselves in a bad credit situation and in need of a ‘bad credit’ car loan. Chances are if you’re reading this post, you’ve had some questions about your credit and whether or not you’d qualify for a car loan. The good news is, getting a car loan with less than perfect credit isn’t as daunting as you’re probably thinking. At Birchwood Credit Solutions we specialize in helping Manitobans with less than perfect credit, secure vehicle financing in-house.
Bad credit car loans are becoming increasingly more common and millions of Canadians have bad credit—some studies say that 20% of Canadians have a credit score of less than 680, which is what is widely considered as “bad credit”.
Whether your credit is good or bad, understanding your credit situation is important when looking for a new vehicle. If you understand where you’re at with regard to your credit, you’ll be able to make more informed decisions when applying for your car loan. on your next vehicle loan. Quite often customers come to us with little to no insight into their credit situation, which is okay, but we want to make sure that as we are working with you, we are informing you and helping you understand your situation. Signing off on a car loan without understanding your credit situation could be disastrous for you in the long run.
The monthly payment for a fully loaded truck is much more than the payment on a compact sedan and when you’re in the market for a new vehicle it's important you’re realistic about what you can afford. Nobody wants to get into a vehicle and take on a vehicle loan they can’t afford, so knowing (and being realistic about) your budget is crucial. Quite often customers come to us with a clear idea of the type of vehicle that they want, but they aren’t exactly sure what they can afford.
One of the most frustrating experiences as a consumer when vehicle shopping is finding your dream vehicle and going through all the steps to purchase it, only to find out you can’t get approved for the loan. For this reason, we recommend potential buyers get pre-approved before getting too deep into their vehicle selection process. When you are pre-approved for a specific loan amount you can shop with confidence.
When shopping for a new vehicle (and specifically when applying for a new car loan) potential buyers will often apply at multiple dealerships over a short period of time, which can actually have a negative impact on your credit score. When applying for a loan of any kind, lenders usually want to look at your credit history to get a complete picture of your financial situation. These checks—also known as credit inquiries—can knock your credit score down by a few points , especially if there are a number of inquiries over a short period of time. If you apply for financing at a lot of places at the same time, it has the potential to make you look like credit risk, which could prevent you from actually getting your car loan. For that reason, you need to be cautious when making an application.
Something else to be aware of is that some dealerships, especially the ones who DON’T lend their own money, will shop (or ‘shotgun’) your car loan application to many different lenders to see which ones will approve your loan. The process usually only takes a few minutes and enables lenders to compete for the loan and for the car dealership to help their customer find the best loan terms. This practice can result in a number of inquiries on your credit, which can have a very negative impact on your credit score, and ultimately prevent you from being approved for your vehicle loan.
Some car dealers and car salespeople have given the industry a bad name with their “fly-by-night” business practices. These dealers sometimes prey on folks who have bad credit and are desperately looking for a car loan. It is important, especially when shopping for a bad credit car loan, that you work with a reputable outfit that you can trust.
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