Obtaining A Car Financing Plan With Bad Credit
Your credit score is very important in the eyes of banks and financing companies. Bad credit, or no credit at all, typically tells these institutions that you’re not responsible with money. They may have no way of knowing whether or not you’ll pay back what you owe. Now, this all makes sense, but what it doesn’t take into account is that many people have bad credit because of factors out of their control.
Most people don’t purposely go out of their way to not pay the bank. Some people lose their jobs when the economy drops. Other times people may need more money to pay medical expenses but have no way of paying the loan back. Bad credit does not mean you’re a bad person, and because of that, we’ve put together this article to help you get car financing despite your bad or non-existing credit. We understand that in order to get on your feet and repair your credit, you may need a vehicle. Stay tuned, for we’ll reveal all the ins and outs of financing a car without great credit.
For those who don’t know what a credit rating is, it is basically a way for banks and other institutions to label you as reliable or unreliable. A rating is a number between 300 and 900, and the rating most people need to get certified for new credit is about 660. The closer you are to 900 the better. These numbers are very powerful. For example, if someone is buying a car but wants to lease or finance it right from the dealership, their credit rating often determines the rate. Great credit will get you great rates. Bad credit may get you horrible rates or just kicked out of the institution altogether. The same goes for mortgage rates and bank loans.
Don’t worry! Just because you have bad credit does not mean this is the end of your story. In this case, it does not mean you’ll be stuck riding the bus for the rest of your life. It may be more difficult to obtain car financing, but we believe it’s as simple as knowing where to look. After all, the average Canadian credit score is below 660 (the rating most institutions require). Considering there are millions of people in the country who struggle to obtain financing or loans, options have become present.
How To Repair Your Credit
Repairing your credit sounds very simple, but in reality, it’s quite difficult. All you have to do is take out a loan and make payments regularly. Do this for a while and your credit score will increase. However, how do you get the loan in the first place? It seems easy at first but in a society where your credit score is relied upon to get a loan, and a loan is relied upon for repairing your credit score, it just doesn’t seem to work! The system is against you! Well, it may seem that way, but it’s not entirely true. There are companies out there that specialize in providing loans to people who have bad or non-existing credit. Alongside increasing your credit, these companies will actually enable you to obtain financing for a vehicle.
Where to Look
When looking for a company to help you, you’ll need to find one that looks at more than just your credit score. Often companies that specialize in this type of thing will look at your annual income. We calculated the average of a lot of these companies, and have come to the conclusion that if you want an auto loan with bad credit, your income needs to be at least $1,800 per month. This is BEFORE any taxation.
We’ve broken down some numbers below to help you out.
- In order to qualify for an auto loan, you must be making at least $10.50 an hour, as well as be working 40 hours a week.
- In order to qualify for an auto loan, you must be making $420 a week at the very minimum.
- In order to qualify for an auto loan, you must be making $845 bi-weekly at the very minimum.
- In order to qualify for an auto loan, you must be making $1,800 a month at the very least.
If you don’t meet the above requirements, it’s not the end of the world. A lot of lenders will actually provide loans as long as you have a steady job, and are being supplemented by the government.
If you’re looking to obtain car financing but have bad credit, used car dealerships are a good place to try. Often these dealerships have programs in place for customers with bad credit, and they’d typically have a large selection of vehicles. Your rates may not be all that great, but at least you have an auto loan. Calculate what you can afford to spend every month on a vehicle, and make your way through used dealerships!
The Type of Car Matters
If you have bad credit, it’s not very likely that you’ll be able to get financing for a fancy car. This just makes sense. However, you’ll have a far better chance of getting financing if you are buying an average car, with average features. Not to mention that actual aspects of that car matter as well. The year of the car, the make and model, the condition, and the mileage or all incredibly important. To sum this up, the grungier the car is, the better chance you’ll be able to get financing. It may suck, but you may be stuck with a less than satisfactory car. At least you’ll be able to get the loan though, and that is what matters. Paying off this loan will increase your credit rating, and in the meantime, at least you have a car!
Try Obtaining a Co-Signer
A co-signer is an excellent asset when it comes to obtaining an auto loan with bad credit. If a co-signer has average or good credit, chances are you’ll get the loan. This is because your co-signer is like a security blanket for the institution. This is a great route to take because you are able to get the loan and build your credit score by paying the loan regularly. A co-signer is unfortunately hard to come by because they take a large portion of the brunt if you fail to pay your fair share.
Another route you can take that’s similar to a co-signer is a co-owner. This means you and the other person are both paying these monthly installments, and you both own the vehicle. This means you both are required to make payments, not just one person. If one co-owner has good credit, and the other has bad credit, the route is still eligible. Similarly to a co-signer, the co-owner with a good credit rating is like a security blanket. They enable the bad credit member to get a loan, and repair their credit score so they can have good credit as well!
So we’ve gone in-depth for some of the details that are prominent when it comes to obtaining car financing. However, we haven’t told you the best part. Our company, the Auto Loan Centre, specializes in bad credit auto loans. Our company is based on the notion that everyone should be eligible for auto loans. We go out of our way to make sure you have a route to take that will boost your credit, and get you the car of your choice. Fill out an application form with us today, and we can get started incredibly soon. Your credit score does not matter here. Contact us, and drive away with the car of your dreams. Trust us, you won’t regret it.