Car Loans for Bad Credit
The process of finding a car loan can be very confusing, especially if you have bad credit. We want to make understanding them as easy as possible for you.
Payments on car loans are calculated using three main things: the principal, the term, and the interest rate.
- Principal: This is the total cost of the vehicle including any fees that the lender or dealership may have for the car loan.
- Term: This is the length of time that payments will be made for. Typically terms will run anywhere between 36 Months (3 years) and 72 Months (6 years), although it is possible to get a car loan it with shorter or longer terms.
- Interest Rate: This is the percentage that the lender is charging for you to borrow money. Interest rates can vary depending on whether the vehicle in question is new or used and the risk the lender perceives in lending the loan.
When you get a car loan you are typically making payments back to a lender rather than to the dealership. That being said, some dealerships will offer in-house financing, which might allow a customer with bad credit to get an auto loan in instances where they otherwise would not have been able to. In this case the car loan is directly with the dealership or “in-house”.
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What am I going to need to get my Car Loan?
When you apply for a car loan lenders are going to want to know that you can afford payments. The fact that a person has bad credit can be looked past if they are able to prove that they can afford the vehicle and have a great chance of making the payments on time.
- Employment or Income: Typically if you want a car loan you need to be at your current job for three or more months and make at least $1500 per month. This indicates that you have income to afford your payments and that, if you’ve been at a job that long, you’re more likely to stay there. There are also cases where lenders are able to accept alternative forms of income, such as certain types of government assistance.
- Driver’s License: It might seem obvious when getting an auto loan, but it is necessary to have a valid driver’s license and be the age of majority in the province that you live in. Lenders know that customers are more likely pay back their car loan if they can legally drive the vehicle.
- Current Address: Lenders want to know where you live and this will be necessary for documents on your car loan.
- Bank Account: When you get your car loan you will need to make payments. The lender wants to be able to take the payment out of your bank account each month. The easiest way to do this is to get a void cheque or stamped pre-authorized payment form.
- Down Payment: You don’t necessarily need to have a down payment when getting a car loan for bad credit, although it can sometimes help. The less you have to finance, the more likely the lender will be to approve your car loan. Ask about zero down finance programs that may be available.
One of these easiest ways to help understand car loans for bad credit is to get connected with one of our affiliate dealerships from our network. They will be able to walk you through all the steps and make sure you find a vehicle and a payment you’re happy with. – Online Application – Fast, Easy and Secure!