How to Get Pre-Approved For an Auto Loan With Bad Credit
There are many advantages in getting pre-approved for a car loan. Although it is indeed an extra step, the benefits far outweigh the hassle especially when you have bad credit. When you get pre-approved you’ll be able to determine the limit of the amount that you want financed thus helping you stay on budget. Additionally it would also allow you to compare interest rates, simplifies the negotiation process when selecting a vehicle and saves you time overall.
This strategy is good for those with bad credit because it is easier to financially manage since you already have an idea on the annual percentage rate (APR) prior to selecting a vehicle. And experts recommend that applying for an auto loan is the best and fastest way of significantly improving your credit. Here are a few steps in order to get a pre-approval on a car loan.
Double Check Your Credit Report
All people are entitled to one free credit report every year so as a consumer you should utilize that perk. Although you were previously categorized as having a low credit score (or that’s what you think) it is advisable to still having a second glance on your report. Errors and loopholes are still much very present despite the fact that credit bureaus’ records are all computer generated and stored. Humans are the ones inputting the data thus the existence of possible errors on your credit report. Furthermore, if you can find any erroneous result you can complain and have it corrected, who knows? You might not have a low credit score after all! You can request a copy of your credit report from TransUnion or Equifax.
Prepare the Necessary Requirements
In Canada, there are many lenders, banks and car dealers that offer instant pre-approved auto loan with very minimal requirements even to those with bad credit. Thus when shopping around for a loan, it is important that you prepare these documents ahead of time in order to avoid any hiccups along the way. Here in New Car Canada, we only have 3 requirements which are:
- Minimum Monthly Income of $1,800
- Updated and Valid Driver’s License
- Can Apply for Car Insurance Coverage
That’s all! You can use your smartphone and fill out our 1 minute online credit application. Also, we provide bad credit and no credit auto loans to anyone who is looking for an automotive financing.
Shop Around For Price Comparison
In any type of purchase, it is always wise to shop around different auto loan providers first before inking a deal. The interest rates and amount of allowable money that they will finance vary per lender or bank. This will allow you to have a comparison so that you can choose the right auto loan for your budget. If possible, you can request for the APR so that you will have a more comprehensive idea on the expenses that you will incur. That is why it is also important to establish a good business relationship with your bank or lender so you can ask them for recommendations.
Choosing Your New Car
After getting pre-approved, you can choose any vehicle within the allowed budget provided by your lender. If you have already decided on a car then good for you. However, if you haven’t yet, they will give you a “blank check” and allow you to shop for a car in car dealerships. Technically, it is not a blank check since you have a limit to follow. Additionally, you should choose a car that is at least a thousand dollars below the maximum allowed amount. This is to ensure that you have breathing room for added fees that you might incur (i.e. insurance coverage) along the process.
If you are looking to buy a used vehicle, other terms might apply to your situation. Usually, they have added guidelines such as the mileage and age of the vehicle. Also, your lender might specify which car dealer you should go to. Most lenders that provide pre-approved loans work with car dealer partners in order to smoothen the overall process. But, if you insist on choosing from a private seller, there is a possibility that you might need to make a personal loan which usually involves very high interest rates.
Improving Your Credit
When all of the necessary paperworks and process is done, you can drive your new car home. As you can see, having a bad credit will not stop you from getting an easy pre-approved car loan. You just have to find a lender that is really motivated in helping you with your needs. Additionally, if you successfully pay your loan, you will end up with a much improved credit score . Apply today and get an approval within 24 hours. We even finance up to $55,000 on any car that you want!
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