Frequently Asked Questions About Bad Credit Car Financing
Nowadays, it is very common for people to have bad credit. And more often than not, people with bad credit have a hard time looking for a car financing that is affordable. Traditional lenders charge a higher interest rate for individuals with bad credit which makes it much harder for them to improve their credit score through a car loan. It just defeats the purpose of helping people overcome their bad credit score.
That is why New Car Canada came into existence, in order to really help people get a car financing that is more affordable, accessible and with very little requirements. We provide any type of car loans to anyone, all we need is 3 basic requirements:
- Minimum monthly income of $1,800
- Valid Driver’s License
- Can apply for insurance
We provide approvals in less than 24 hours and our application process is free of charge with no obligations to buy or pay any hidden costs. We have the fastest online car loan approval in Canada.
Here are some questions that most people want to know about bad credit car loans.
Will my credit score decrease if I frequently monitor it?
Some people believe that constantly checking their credit report will decrease their credit score. This is simply not true. Checking your credit is plainly an inquiry and does not affect in any way (whatsoever) your credit score. In fact, regularly checking your credit report is actually beneficial since you will be more aware of your credit standing. This is the first step that you should do when applying for a bad credit car loan. Erroneous results can happen and if you don’t check your credit report, you might be missing some credit points that should have been credited to you.
Will my bad credit score haunt me forever?
NO it won’t. There are a lot of ways for you to improve your credit score. Successfully settling all your debts or consistently paying your bills on time are only some steps that will certainly increase your credit. However, the most effective and fastest way of regaining your strong credit is to apply for a car loan and paying it off promptly. This will surely boost up your credit significantly. More importantly, you should choose a vehicle that is well within your budget in order to avoid getting behind on your loan.
What are other factors that influence my approval for a bad credit auto loan?
Other than your credit score, there are other aspects that a lender considers upon evaluating your loan application. One of those factors that can certainly affect your approval is your Debt Service Coverage Ratio or DSCR. This is the ratio of money that the buyer has in order to repay his or her debt against the original (principal) loan amount. In simpler terms, this is the comparison between the buyer’s total money available and the total expenses involved in the auto loan he or she is applying for. If the ratio is higher, then it would be much easier to secure an auto loan. To give an example, if you are earning $11,000 per month but your total debt is $4,000, obtaining a car loan might be very challenging.
Additionally, there is another factor that you might want to look at before agreeing to a deal, and this is the APR (Annual Percentage Rate). It may also be called as Nominal APR or Effective APR. To differentiate, Nominal APR is the simple interest rate for each year while Effective APR is the total expenses plus compounded interest. To those who don’t know, APR is the total annual interest rate that your auto loan incurs and this is actually a better reference than just looking at the monthly obligations. By considering the APR, you will have a wider perspective on the total expenses involved.
How will I secure an approved bad auto loan?
By choosing New Car Canada, we can offer you a ton of bad credit auto loan options that is guaranteed to be light on your budget. Regardless of how horrible your credit situation is, we can get you approved on any vehicle that you want. As long as you have a valid driver’s license and a steady monthly income of at least $1,800, you can enjoy New Car Canada’s affordable auto loan offers. We finance up to $45,000 on any car that will suit your needs. Fill out our simple online credit application and get approved within 24 hours.
What is negative equity?
When you are upside down on your loan, you are accumulating negative equity. What this basically means is that, you are paying for a vehicle that is more than its actual worth. Negative equity occurs very often especially when a car buyer agrees to a long term loan period or a car loan with unreasonably high interest. Gaining negative equity is normal especially during the first two years of your car loan because of the initial loss (depreciation) your vehicle incurs as soon as you take it out of your dealer’s lot.
However, if you make a down payment (20% of the purchase price is the recommended amount), you will mitigate the initial loss of value that your car experiences. To add, agreeing to a short term auto loan (i.e. 3 or 5 years) will also help counter negative equity accumulation.
Having a bad credit doesn’t automatically mean overkill interest rates or very few options. If you just work with a good lender, you won’t have any problems securing a bad credit car loan that is affordable. New Car Canada specializes in bad credit and no credit car financing. All you need to do is fill out our 1-minute online application and you can get started in improving your credit.
We provide free service in 8 provinces, Ontario, Nova Scotia, New Brunswick, PEI, New Foundland, Manitoba, Saskatchewan, and British Columbia. We service everyone from Toronto, Ottawa, London, Hamilton, Mississauga, North Bay, Thunder Bay, Sudbury, Sault Ste. Marie, Barrie, Oshawa, Brampton, Kitchener, St. Catharine’s, Niagara Falls, Belleville, Windsor, Bracebridge, Gravenhurst, Collingwood, Orillia, Peterborough, Nepean, Cornwall, Kingston, St. Johns, Saint. John, Moncton, Winnipeg, Brandon, Red Deer, Calgary, Edmonton, Saskatoon, Regina, Kamloops, Victoria, Surrey, Kelowna, Vernon, Prince George, Nanaimo, Fort McMurray, Banff, Moose Jaw, Prince Albert, Swift Current and the rest of Canada. Our dealer network is one of the largest in Canada and always provides free finance to own quotes.